* Aeon to launch new online business using Ocado's
technology
* Deal anticipates sales capacity of $5.52 billion by 2030
* Agreement is Ocado's first in Asia
* Ocado shares surge as much as 15%
(Adds CEO, analyst quotes, detail, shares)
By Ritsuko Ando and James Davey
TOKYO/LONDON Nov 29 (Reuters) - Japan's biggest supermarket
group, Aeon Co Ltd has hired British online grocery
pioneer Ocado to develop its e-commerce business,
hoping to fend off rivals such as Amazon as more
customers buy groceries online.
Ocado shares leapt as much as 15% in early Friday trading as
investors welcomed the latest partnership for the British
company, whose technology deals have become more important than
its original business of selling food online.
"Given that Japan must have plenty of rival automated
robotic warehouse providers, this is quite a coup for the
business," said independent retail analyst Nick Bubb.
Internet grocery shopping has yet to take off in Japan,
where consumers still often buy fresh produce on a daily basis.
But growing numbers of working women and improved technology and
logistics networks are expected to change that.
Aeon's rival Seiyu, operated by U.S. retail giant Walmart
Inc, launched an online grocery venture with e-commerce
firm Rakuten Inc in 2018, aiming to compete with the
likes of Amazon Fresh.
Aeon, which operates more than 21,000 stores and has about
100 million customers, plans to harness Ocado's robotic
warehouses, which it calls customer fulfilment centres (CFCs),
and its software to create a distribution network serving the
whole of the Japanese market.
The partnership anticipates Aeon will have an online grocery
sales capacity of about 600 billion yen ($5.5 billion) by 2030
and 1 trillion yen by 2035.
Initial CFCs will serve Japan's Kanto region, with the first
planned to go live in 2023, followed by others over the next two
years.
Aeon will also use Ocado's product-picking software within
parts of its existing store network, and offer click-and-collect
services from selected sites.
The Japanese firm did not say how much it was paying Ocado,
but said the agreement included upfront fees, in addition to
later payments which will depend on sales performance and
capacity installation.
"We see Ocado as a state-of-the-art, exciting and
transformative partner aligned with our strategy of accelerating
Aeon's digital shift to serve Japan's consumers," said Aeon CEO
Motoya Okada.
The deal is Ocado's first in Asia.
While Ocado's retail business has only a 1.4% share of
Britain's grocery market, its technology has powered the group's
8.4 billion pound ($10.8 billion) stock market valuation,
enabling it to win partnership deals with supermarket groups
including Kroger in the United States and Casino
in France.
Ocado said it expected an additional 25 million pounds
($32.1 million) of operating costs in its fiscal 2020 year to
implement the Aeon deal.
In February, Ocado and Marks & Spencer agreed a
1.5-billion-pound joint venture, signalling the end of Ocado's
long running supply contract with upmarket supermarket chain
Waitrose in September 2020.
($1=108.6400 yen)
($1 = 0.7794 pounds)
(Reporting by Ritsuko Ando in Tokyo and James Davey in London;
Editing by Clarence Fernandez and Mark Potter)
Ocado (OCDO)
Marks & Spencer (MKS)