Having Ocado as a partner will give Kroger a head start in realizing profitability in the online grocery arena, according to Diana Sheehan, vice president of retail and shopper insights at Kantar Consulting.
The deal with Kroger is arguably Ocado's biggest to date and demonstrates that the company's technology push is starting to gain traction after some five years or so of pushing it.
According to Ocado, the partnership aims to allow Kroger to "redefine the grocery customer experience" in the USA by establishing a centralised, automated model of online retailing.
Kroger has almost 2,800 shops across 35 U.S. states and annual sales of $122bn in 2017.
Tim Steiner, CEO of Ocado Group, said, "Our success as a retailer shows that we can offer customers unrivaled choice, quality and convenience, efficiently and profitably".
Perhaps the string of tie-ups with big global retail players and yesterday's blockbuster response will force Ocado's critics to acknowledge the online grocer's potential.More news: Banned ozone-destroying gas may still be in production
Kroger is to pay monthly exclusivity and consultancy fees to Ocado which will partially offset in part the total fees that are be agreed between the two parties.
Rodney McMullen, Kroger's chief executive, said the partnership would the grocer "redefine the food and grocery customer experience - creating value for customers and shareholders alike".
Under the partnership, the pair are looking to open three similar sites in the United States this year - with a further 17 in the pipeline.
"Ocado has really awesome technology that works", said Ken Lonyai, Independent Consultant and Strategist, in a RetailWire discussion.
Kroger Co shares were trading at $25.58 per share on Thursday morning, up $0.64 (+2.57%). Shares in Ocado were at 552 pence before the deal was announced. Ocado has no chain of stores and does all home deliveries from its warehouses. Kroger will also take a 5 per cent stake in Ocado. "We are actively creating a seamless digital experience for our customers".
It took a mega deal with a U.S. grocer for Ocado to prove that it's no basket case.