British online retail and technology specialist Ocado Group has finalised a substantial compensation agreement with its American partner, Kroger. The US supermarket giant will pay $350 million (£262 million) to Ocado in January 2026, following its decision to scale back ambitious automated warehouse plans.
Scaling Back Automation Ambitions
The payout comes directly after Kroger's announcement in November 2025 that it would shutter three existing robotic warehouses and abandon plans for a new site in Charlotte, North Carolina. This site was one of two facilities scheduled to launch in 2026. The initial partnership, forged in 2018, envisioned building the equivalent of 20 high-tech customer fulfilment centres (CFCs). To date, only eight have been opened.
Kroger's leadership indicated earlier this year that it was reviewing its use of Ocado's automation technology as part of a broader drive to cut costs and enhance profitability. The US retailer now plans to focus more on fulfilling online orders directly from its stores to improve speed and efficiency.
Financial Impact and Future Partnership
The news of the warehouse closures initially sent Ocado's share price tumbling, with the company warning it would reduce current-year fee revenues by approximately $50 million (£38 million). However, the agreed compensation of $350 million exceeds the $250 million (£190 million) Ocado had initially anticipated receiving.
Despite the scaling back, the partnership is not over. Ocado will continue to operate five existing CFCs for Kroger in Monroe, Dallas, Atlanta, Denver, and Detroit. The UK firm has committed to supporting logistics operations and driving sales growth at these remaining sites.
Leadership's Perspective on Evolving Technology
Tim Steiner, Chief Executive of Ocado Group, emphasised the company's ongoing commitment. "We continue to invest significant resources to support our partners at Kroger," he stated. Steiner highlighted that Ocado's technology portfolio has evolved, now encompassing not only the systems deployed in Kroger's network but also new fulfilment products designed for wider applications, including store-based automation for 'pick up' services.
"We remain excited about the opportunity for Ocado’s evolving products in the US market," Steiner added, signalling confidence in the long-term potential of their technology abroad.
Ocado's business is split between its global technology solutions arm and Ocado Retail, a UK online grocery joint venture with Marks & Spencer. The group recently reported a strong financial turnaround, posting a pre-tax profit of £611.8 million for the six months to 1 June 2025, rebounding from a loss of £153.3 million the previous year, partly due to a revaluation of its stake in the retail venture.
