Morrisons expands home delivery service

Morrisons expands home delivery service

Andrew Cummings
August 9, 2016

The UK's fourth-biggest supermarket chain has sealed a deal with Ocado, the online grocer, that will enable it to compete more aggressively for home delivery customers through the launch of a nationwide service.

It will also increase the number of non-food brands it sells online by offering customers products, such as Playmobil and Vtech toys, which are now available on Ocado but not at Morrisons.

Aug 9 British supermarket WM Morrison said on Tuesday it had agreed new terms with its online partner Ocado which will see it extend home delivery across the country using its own stores to pick products.

Ocado's Customer Fulfilment Centre in Hatfield
Ocado's Customer Fulfilment Centre in Hatfield

Morrisons' exclusivity restrictions on Ocado will also be reduced when the store pick solution goes live, "although it will still be prohibited from serving certain grocery retailers".

Morrisons' online business is available to about half of United Kingdom households, but now does not deliver to areas such as the South West or Scotland. The FTSE 100 group noted that the profit share agreement will be cancelled, and that the research and development fee will be reduced.

Once the store pick model becomes operational, Morrisons contractual obligation to share a proportion of its future online profits with Ocado will end.

Restricted retailers are Tesco, Asda, Sainsburys, Aldi and Lidl.

"As food maker and shopkeeper, we continue to "follow the customer" and move towards achieving capital light, profitable growth online".

The main change is the lifting of a restriction on store picking, allowing Morrisons to service orders from its outlets across the United Kingdom, significantly extending the reach of its delivery network.

Led by chief executive David Potts, Morrisons‎ has sought to restructure a deal struck in 2013 under which it paid £170m to buy an Ocado warehouse in Warwickshire.

It also recently joined forces with Amazon, allowing the internet giant to deliver fresh and frozen food products for the first time.

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