Morrisons has signed a deal with online grocer Ocado to enable it to reach more home delivery customers throughout the UK.
The UK’s fourth-biggest supermarket chain has confirmed it would take capacity at an Ocado warehouse in Erith, Kent, and Ocado would also provide a store-picking service to Morrisons – paving the way for a comprehensive home delivery service.
Prior restrictions will also be lifted, enabling Morrisons to fulfil online orders via store pick anywhere in Britain, including areas not currently covered by the supermarket retailer.
Once the store pick model becomes operational, Morrisons obligation to share a proportion of its future online profits with Ocado will end. Exclusivity restrictions on Ocado will also be reduced, but it will still be prohibited from working with competitors Tesco, Asda, Sainsbury’s, Aldi and Lidl.
In addition, once Morrison’s capacity in the Erith warehouse becomes operational, it will pay Ocado a reduced annual R&D fee.
The new agreement essentially amends Morrisons’ disadvantage to rivals such as Tesco and J Sainsbury – in that its online delivery only served about half of UK households.
“As food maker and shopkeeper, we continue to ‘follow the customer’ and move towards achieving capital light, profitable growth online,” Morrisons chief executive David Potts said.