Opinion: Casino's bet on Ocado should pay off

The partnership foresees the development of Monoprix.fr first, as well as the creation of a customer fulfilment centre near Paris.

The move – its first partnership with an international retailer – marks a crucial step in the growth of Ocado Solutions.

The online grocer said that it expects the deal to create significant long-term value, though profitability is not likely to be achieved before the 2018/19 financial year.

“This agreement is a major leap in terms of quality: 50,000 food items will be offered in the first stage to customers in the Greater Paris area with precise and speedy delivery at home and through a platform, which makes it achievable to do this profitably,” Groupe Casino chief executive Jean-Charles Naouri says.

In Planet Retail RNG’s view, this is great news for Ocado, which needed to secure a major international project for its Smart Platform.

Advanced technology

Ocado has committed huge investment into the technology, which has involved a lot of innovation in robotics as well as artificial intelligence.

The deal is particularly important after the underwhelming and largely negative press Ocado received back in June, after it revealed details of the agreement it penned with a “regional European retailer”, which remains unnamed.

The technology behind the Ocado Smart Platform is quite advanced and certainly more sophisticated than what Amazon is currently using at its fulfilment centres.

Therefore, it will require heavy investment for Casino, which makes the two-year timeline for return on investment quite realistic, if not optimistic.

For Casino, the tie-up with Ocado is geared to its aspiration of operating food ecommerce profitably.

Online grocery is notoriously costly to run due to the need for short delivery windows and expensive temperature-controlled delivery vehicles.

“The technology behind the Ocado Smart Platform is quite advanced and certainly more sophisticated than what Amazon is currently using at its fulfilment centres”

But comments from Casino’s chief executive indicate that Ocado’s ability to offer solutions that allow online grocery to be profitable was a major factor in the tie-up.

Of course, wider competition within the French grocery market is at play here.

With US etail titan Amazon looking for potential grocery partners – having already purchased Whole Foods in the US and partnered with Morrisons in the UK – and Carrefour launching rapid one-hour home delivery services in major urban areas like Paris, Casino was in need of a partner to boost its capability.

If speed, reliability, and efficiency are the name of the game, then Ocado certainly has a lot to offer.

• David Gray is a senior retail analyst at Planet Retail RNG