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Morrisons and Ocado renegotiate partnership agreement following Andover fire

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Morrisons and Ocado have renegotiated their partnership agreement, clearing the way for Morrisons to have more than one digital partner, following the recent fire at the online grocer’s Andover customer fulfilment centre (CFC). 

Ocado’s ecommerce and fulfilment technology and infrastructure have operated Morrisons online delivery channel since it launched in 2014. But Ocado’s own automated grocery operations were interrupted when fire, later traced to a battery charger in its ambient robot grid, destroyed its Andover CFC in February. 

Now Morrisons has agreed to make space for Ocado to redevelop its fulfilment capacity by moving out of its space in another of the online grocer’s CFCs, in Erith, North London, until 2021. The move will save Morrison money, both because it will not have any costs related to that fulfilment centre and because it will pay lower fees as it expands its use of Ocado’s pick-from-store technology. Currently, it accounts for more than 10,000 orders a week at Erith and has the right to 30% of that centre’s future order capacity. 

David Potts, Morrisons chief executive, said: “We are pleased to be helping our partner in times of need after the recent fire. We will keep growing for our customers and save some cost, returning to the Erith CFC when it is more mature.

“Our new agreement allows us to have more than one digital partner and opens the way for significant potential opportunities and partnerships in this important growth area for Morrisons.”

Tim Steiner, Ocado chief executive, said: “Morrisons is a  valued partner of Ocado and we are glad that we have been able to come to an equitable and pragmatic agreement that is in the interests of both parties. We look forward to welcoming Morrisons back to Erith in February 2021. 

Morrisons, a Top50 retailer in IRUK Top500 research, was the first customer for Top100-listed Ocado’s Ocado Smart Platform technology, but it has since added a range of customers including Kroger in the US, Sobeys in Canada and Groupe Casino in France. Today, Ocado also announced that the second Sobeys fulfilment centre site would be in Montreal. Ocado has also agreed terms to sell half of Ocado Retail to M&S, subject to shareholder approval.

Finally, Ocado also announced today that it had invested in robotics business Karakuri, which it says has the potential to revolutionise the way ready-to-eat meals are prepared.

Image: InternetRetailing Media/Paul Skeldon

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