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Ocado to build robotic fulfilment centre in Japan in new deal with retail chain Aeon

Ocado to build robotic fulfilment centre in Japan in new deal with retail chain Aeon

Aeon will get a warehouse just like this, off-the-shelf from Ocado, to fuel its online expansion in Japan Ocado has signed a deal with Japan’s largest retailer Aeon to build advanced warehouses and supply ecommerce technology for the ¥1 trillion (£7bn) turnover chain. The company will build a series of highly automated customer fulfilment centres

Ocado to build robotic fulfilment centre in Japan in new deal with retail chain Aeon

Aeon will get a warehouse just like this, off-the-shelf from Ocado, to fuel its online expansion in Japan

Ocado has signed a deal with Japan’s largest retailer Aeon to build advanced warehouses and supply ecommerce technology for the ¥1 trillion (£7bn) turnover chain.

The company will build a series of highly automated customer fulfilment centres to facilitate Chiba, Japan-based Aeon’s belated drive towards home delivery services. Analysts at investment bank Morgan Stanley suggested that the deal would be of a similar size to Ocado’s agreement with Kroger in the US.

There will come a day when entering China is sensible, but not yet

The deal – as with all of Ocado’s overseas deals – will be exclusive to Aeon, in this case, in Japan. However, the retailer also has operations across Asia in China, Hong Kong, Indonesia, Malaysia and Thailand, which could provide further opportunities in the future for Ocado.

While Japanese retail networks have been known, in the past, for being somewhat sclerotic and inefficient, they are belatedly embracing automation as a means of overcoming acute labour shortages, partly due to the country’s ageing population profile. In recent years, too, the sector has been shaken up by the removal of trade barriers.

Japan’s online shopping market is the fourth largest in the world, according to analysts, behind the US, China and UK. Aeon, in particular, has also struggled to replicate its dominance in Japanese shopping malls and High Streets into online retail.

“Aeon is the leading mass merchandiser not only in Japan but in Asia-Pacific as a whole. However, the company is struggling to establish itself in internet retailing,” notes analyst group Euromonitor.

Aeon operates more than 21,000 stores, including supermarkets, convenience outlets, fashion chains and general retailers. It operates in 14 countries in total, and has recently been expanding into Vietnam.

Ocado now has deals in five countries across the world, including the US, with Kroger; Canada, with Sobeys; Coles in Australia; and, Groupe Casino in France – as well as Ocado in the UK, of course. In a conference call today, according to Bloomberg, chief financial officer Duncan Tatton-Brown suggested that Ocado could conceivably strike a deal in China – but not any time soon.

“There will come a day when entering China is sensible, but not yet,” said Tatton-Brown.

The deal will further support Ocado’s strategic move of selling a 50 per cent stake in the UK home delivery grocery business to Marks & Spencer earlier this year, which provided a further £750 million that can be ploughed into technology development.

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