NCR expands e-commerce capabilities with acquisition of Freshop

NCR company NCR recently announced the acquisition of Freshop, a provider of e-commerce solutions for the food industry. Under the agreement, Freshop’s e-commerce solution will be integrated with NCR’s core point-of-sale (POS) software platform. Financial details of the transaction remained undisclosed.

Justification for the takeover

The addition of Freshop’s e-commerce solutions to the NCR platform will enable faster rollout of buy online and pick up in store capabilities for retailers, including regional and small grocery chains. The integration will help retailers improve customer shopping experiences and strengthen their brands. This will also make it easier for these retailers to increase margins compared to third-party e-commerce service providers.

Moreover, Freshop’s e-commerce solution will become a key element of NCR’s next-generation retail store architecture, including NCR Emerald. Notably, NCR Emerald simplifies the in-store experience for retailers. The acquisition is expected to further improve its performance by adding new capabilities.

The company believes that the addition of Freshop will further enhance NCR’s product capabilities and service-based offering, thereby facilitating customer acquisition.

Solid traction among retailers strengthens growth

NCR shares have gained 9.8% over the past year, while the Zacks Computer – Integrated Systems industry has lost 9.4%.

This outperformance can be attributed to strong retailer adoption of NCR’s retail solutions, especially its cloud-based POS software and self-service technologies.

Earlier in December 2020, the company’s cloud-based retail POS platform featuring NCR Emerald was selected by leading supermarket chain Big Y. The solution enables Big Y to integrate grocery and convenience stores with a unified platform.

Additionally, Advanced Store POS software and NCR loyalty software were selected Best offer BBY Canada aims to improve the in-store customer experience by providing flexible shopping options. Best Buy is implementing the NCR solution in all of its 175 locations in Canada, which has strengthened NCR’s presence in the market.

In addition, the company is benefiting from the increased demand for self-service checkouts from retailers due to the coronavirus epidemic. Notably, the company has over 1.5 million checkout counters worldwide. Innovations such as the contactless self-service checkout, which ensures health safety in the face of the pandemic, are also a big positive.

Jumbo Supermarkten has selected NCR to provide self-checkout solutions to over 680 retail stores in the Netherlands and Belgium. This complements the capabilities implemented by Jumbo, which include the NCR R10 enterprise software platform and the NCR FastLane Mobile Shopper mobile scanning solution.

Notably, NCR’s retail revenues increased 3% on a reported basis and 2% on a per cc basis to $556 million in the third quarter of 2020. Retail revenues were primarily driven by an increase in self-checkout revenues, which partially offset lower revenues from POS. Moreover, the company expects retail revenue of $2.1 billion in 2020.

Zacks Rank and Stocks to Consider

NCR is currently carrying a Zacks Rank #3 (Hold).

Some stocks in the broader technology sector are performing better Terada company TDC i PerkinElmer PKI. Both stocks are currently sporting a Zacks Rank #1 (Strong Buy). You can see complete list of today’s Zacks #1 ranked stocks here.

PerkinElmer and Teradata’s long-term earnings growth rates are currently 19.5% and 16.1%, respectively.

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