Morrisons seals deal with Ocado for new online service

Friday 17 May 2013 17.52
Morrisons to start selling groceries online from next January
Morrisons to start selling groceries online from next January

Britain's number four supermarket Wm Morrisons has agreed a long term deal with online grocer Ocado to enable Morrisons.com to start grocery deliveries to customers by January 2014 and catch up with rivals.

Morrisons, which trails UK market leader Tesco, Wal-Mart's Asda and J Sainsbury in UK market share, has been hurt in recent years by its lack of an online offer.

It said its website will have a clear "Morrisons look and feel."

Fulfilment will be from Ocado's recently opened Dordon distribution centre in central England, with deliveries carried out by a Morrisons-liveried fleet.

Morrisons will make an initial capital payment of £170m sterling to Ocado to acquire Dordon and associated equipment, as well as a licence and integration fee.

It said a further £46m will be invested to expand Dordon in order to accommodate Morrisons' range, integrate with its systems and establish a network of delivery spokes.

Morrisons said there would be a further £25m of development costs in the year and forecast that the online business would be earnings positive by 2016-2017.

"I'm confident that Morrisons.com will grow over time to be an operation of real scale and significance whilst creating meaningful long-term value for Morrisons shareholders," chief executive Dalton Philips said.