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Ocado extends Waitrose tie-up to 2020

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Online grocer Ocado will continue to deliver Waitrose    goods for at least another 10 years, under the terms of a new deal between the two partners.

The agreement means that Ocado will also be able to use Waitrose branding on its website and on its more than 700 vans, taking forward a relationship that started in 2002.

Tim Steiner, chief executive of Ocado, said: “Waitrose is a fantastic brand and a great partner with whom we have worked so successfully together for the last decade.

“In areas where Waitrose and Ocado trade together we have both grown significantly ahead of our competition. Our customers have shown both of us how much they value the relationship between Waitrose and Ocado.”

Mark Price, managing director of Waitrose, said: “Waitrose and Ocado have worked together for many years and are complementary businesses with a shared passion for high quality food, outstanding customer service and great value. This new agreement pages the way for another long period of growth together.”

This news gives certainty to Ocado’s business going forward, and, it’s speculated, is likely to mean its long-trailed stockmarket flotation takes place in July.

Some commentators had suggested that Waitrose’s own home delivery service might challenge Ocado’s partnership with the supermarket in the future – and might make the company’s shares a less attractive deal when it comes to list in an IPO, coupled with the fact that Ocado has yet to make a profit.

However, Waitrose’s parent-company the John Lewis Partnership, owns a sizeable stake in Ocado through its pension scheme, making its future a mutual interest between the two partners.

Our view: This contract couldn't be better news for Ocado, since it gives that degree of extra certainty not only to the business and staff but also to potential investors. If a float is successful, as it now seems more likely to be in admittedly uncertain times, that's likely to mean investment for the business that should give it wider coverage and the ability to bring its innovations to areas of the country that it doesn't yet serve. It's worth remembering this is the first UK supermarket delivery service to allow customers to shop by mobile, and it's also one that puts the emphasis on customer service. Bringing these advantages to a wider market has got to be good for competition.
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