Morrisons extends deal with Ocado, expanding delivery nationwide

By Erin Smith

Published: 10 August, 2016

Yesterday Morrisons announced it struck a new deal with online delivery service Ocado, expanding its current services nationwide.

A major change to the deal that has been in place since Morrisons partnered with Ocado, which started fulfilling its online delivery in January 2014, is the restriction on Morrisons to pick products for home delivery from its own stores.

The lift on using its own network of stores for delivery anywhere across the UK will expand delivery serve to areas that currently are not covered, doubling areas the grocer can now reach including parts of south London and Scotland.

Ocado will develop the technology for morrisions.com.

"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," said Morrisons' chief executive, David Potts.

Growth online for the retailer has not yet been a profitable endeavour and this further expansion will push the breakeven point for the online business later than originally planned.

The City was pleased with news according to analyst Connor Campbell, a senior market analyst at www.spreadex.com.

He said: "In a move set to bolster both businesses Morrisons and Ocado have announced a more expansive version of their previous partnership, one that will see the former now deliver across the entirety of the UK. Investors were impressed with the decision, with Morrisons jumping 2% and Ocado climbing over 5%. The fact that the two have worked together in the past means it should be a smooth transition into this wider service, with both benefiting from a wider reach around the country."

The original deal between Morrisons and Ocado was signed in 2013 by the previous Morrisons CEO, Dalton Philips.

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