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9 August 2016

Ocado and Morrisons agree new terms

Morrisons chief executive David Potts said: "The new investments in online growth are further examples of Morrisons building a broader business and will allow millions more customers all over Britain to enjoy Morrisons good quality fresh food and great value for money. As food maker and shopkeeper, we continue to 'follow the customer' and move towards achieving capital light, profitable growth online."

Ocado and Morrisons have agreed an arrangement through which some of the capacity at Ocado’s new customer fulfilment centre (CFC) at Erith will be shared.

Currently under construction, the new CFC in south east London is due to commence operations in Ocado’s 2018 financial year and is expected to have eventual capacity in excess of 200,000 orders per week.

Morrisons became the first customer of Ocado’s technology platform and existing infrastructure facilities when, in 2013, the agreed a deal for Ocado to provide certain technology, logistics and distribution services to enable Morrisons to launch its online grocery business.

Since then, Ocado has launched the Ocado Smart Platform (OSP) proposition, a solution that aims to enable retailers to run a successful online grocery business. The terms of the new agreement with Morrisons are structured in a similar way to those offered to potential OSP customers with significantly lower up-front capital costs and on-going annual fees dependent on capacity.

Ocado has also agreed to license to Morrisons its newly announced store pick module from the OSP solution; this new module will allow OSP customers further options to expand their online businesses. This module will provide Morrisons with all of the software necessary for it to fulfil online orders from its stores alongside those online orders fulfilled by Ocado for Morrisons from its CFCs.

It is expected that Morrisons will commence the roll out of the store-pick solution in 2017.

Ocado ceo Tim Steiner said: “I am delighted to announce this extension to our agreement with Morrisons, which will provide them with additional capacity for the growth of their online business, supported by our proprietary technology and infrastructure solutions. We see this agreement as a further endorsement of the strength and attractiveness of our capabilities that we can provide to our existing UK partner and for retail partners globally.”

Morrisons chief executive David Potts said: 'The new investments in online growth are further examples of Morrisons building a broader business and will allow millions more customers all over Britain to enjoy Morrisons good quality fresh food and great value for money. As food maker and shopkeeper, we continue to 'follow the customer' and move towards achieving capital light, profitable growth online.'

 

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