Following Kroger and Sobeys setbacks, Ocado is rebuilding grow through cost cuts, new partnerships and flexible technology-led solutions.
At a Glance
Ocado has been subject to many ups and downs in the past year, closures in North America caused concerns for the business, but new hope has come from a few key directions.
For the past ten years or so, Ocado built its investment story around the global rollout of its automated fulfilment technology. However, the last year has exposed both strengths, and some serious weaknesses with its model. High-profile partner pullbacks in North America raised concerns over the economics of large automated warehouses, even as Ocado’s partnerships and technological innovation continue to grow. Ocado is entering a crucial period that will determine the business’ ability to sustain growth.
Kroger and Sobeys give big blows to the business
Ocado ended 2025 with a devastating twist, its largest global partner, Kroger, announced it would close three automated customer fulfilment centres in Maryland, Wisconsin, and Florida after failing to meet financial expectations. The closures represented a significant setback for the partnership which initially was set to bring 20 fulfilment centres across the US. Ocado received over $250m in compensation but are expected to lose $50m in annual fee revenue. These closures caused the single biggest drop in Ocado’s share, dropping 17.4% in a single day.
The situation grew worse in January 2026 when Canadian partner Sobeys decided to close its Calgary fulfilment centre, claiming slow growth in Alberta’s online grocery market. Ocado expects £18m in compensation but loses around £7m in annual fee revenue. Another centre in Vancouver which was planned has also been halted. This closure caused a further share drop of 7%.
These decisions cast doubt over the viability of large-scale automated fulfilment in stronger economies. The share drops made investors view Ocado as a risk, with the model only seeming viable in markets with sufficient online grocery demand.
Cutting jobs to cut costs
In response to these challenges, Ocado has been streamlining operations to improve profitability and drive a turnaround.
The company announced plans to remove 1,000 jobs globally. This was part of a restructuring programme designed to deliver £150m in cost savings. Chief Executive Tim Steiner positioned the programme as a necessary step towards achieving sustainable positive cash flow, with borrowing costs rising and total debt remaining significant.
The cost-cutting measures underline a shift in strategy, moving from growth-at-all-costs towards proving viability.
Bringing Asda in
The next significant development for Ocado was securing a technology partnership with Asda. The agreement will see Asda deploy the Ocado Smart Platform (OSP) across its digital operations from 2027, covering its website, app, store-picking and home delivery operations. For Asda, the deal provides access to advanced AI driven forecasting, fulfilment and personalisation capabilities. For Ocado, it represents an important endorsement from one of the UK’s largest grocery retailers.
This partnership showcases a different route to growth for Ocado. Rather than relying on expensive to build and run fulfilment centres, Ocado shows its technology solutions can enhance existing store networks. This can reduce the cost of implementation and time to go live.
Half-year results
Ocado’s half-year results 2026 reflected both the challenges and progress made across the business. Reported revenue increased 54% to £1.04bn, with its adjusted EBITDA rising to £432m. However, much of these increases came from the compensation payments linked to the Kroger and Sobeys closures. Excluding these impacts, revenue increased by 1% and adjusted EBITDA dropped to £81m.
Operationally, there were encouraging signs. International fulfilment centre volumes rose 27%, and Ocado Retail delivered 15% revenue growth. The company also reiterated that its £150m cost-saving programme remains on track.
Nemlig and Lotte
While North American operations created headwinds, Ocado continued to win partnerships across other markets.
In August 2026, Ocado confirmed Danish online grocer Nemlig as its latest international partner. The agreement will see the companies develop a new automated fulfilment centre near Copenhagen using Ocado’s latest technologies. Nemlig plans to transfer significant order volumes into the facility on launch in 2028. The announcement caused Ocado’s share price to shoot up by 12% in a single trading session.
Meanwhile, Ocado expanded its relationship with South Korea’s Lotte. The partnership includes a highly automated fulfilment centre in Busan designed to serve around four million households and support South Korea’s fast-growing online grocery market. The project is particularly important because South Korea represents one of the world’s most advanced ecommerce grocery markets, offering a valuable test case for Ocado’s technology and viability.
Both partnerships help demonstrate that retailers remain interested in Ocado’s automation offer, particularly markets where online grocery demand is strong and densely concentrated.
Coles robotics
Another potentially important development emerged in October 2026 in Australia.
Reports suggest Coles is exploring the use of Ocado’s robotic technology inside supermarkets to automate picking and packing of online orders. While discussions remain at an early stage, the concept would involve smaller, store based automated fulfilment solutions rather than traditional large warehouses. Ocado saw a 6.9% rise in share price following the news, with investors seeing it as evidence for monetisation in smaller, lower-cost formats.
This could prove a sizeable new growth avenue while reducing reliance on high-cost mega fulfilment centres.
Outlook
Ocado is at a crossroads, the withdrawal by Kroger and Sobeys exposed weaknesses in the economics of automated fulfilment in some markets while also damaging investor confidence. Yet the company has responded and done so fast, streamlining operations, evolving its technology proposition, and securing some high-profile partnerships.
Ocado’s route to proven and sustained growth seems to be less dependent on building large-scale fulfilment centres, but rather on flexible technology deployments and use in already existing retailer networks.
The next 12-24 months will be critical, with investors watching closely to see whether the new measures to drive growth can outweigh the setbacks seen in North America, and if Ocado can prove its technology-led vision can still deliver growth.
