Morrisons will utilise long-standing tech partner Ocado’s fulfilment centres to help drive its move to more in-store fulfilment, as the bricks-and-mortar grocer reassesses its online grocery operations.
Morrisons, which has been working with Ocado since 2013, will “gradually cease” deliveries from Ocado’s Erith fulfilment centre in the South East, according to a statement from the online grocer this morning.
The supermarket giant plans to increase volumes from Ocado’s Midlands fulfilment centre and expand its store network, where online orders are processed using Ocado’s AI-powered in-store technology.
Morrisons CEO Rami Baitiéh said the change was driven by rising demand for the supermarket’s online offering.
“We have a successful partnership with Ocado and we value their expertise and their technology highly. As our online business continues to grow we have decided to process a greater share of our online volume through the Dordon CFC and with in-store fulfilment – which gives our customers full access to our unique Market Street offer.”
He confirmed that Morrisons.com will “continue to service every postcode in England, Wales and Scotland, with no impact to customers.”
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Ocado CEO Tim Steiner added : “With our world-leading technology, Ocado Retail and Morrisons offer amazing propositions in the UK online grocery market.
“As Morrisons reduce their operations at Erith and build their volumes in other parts of the network, we are working with them to ensure seamless continuity of service to their customers and to continue strong market share growth across the UK market with the Ocado Smart Platform.”
Steiner said that the reduced pressure on the Erith fulfilment centre would allow Ocado’s online grocery arm to grow.
“As Ocado Retail moves towards full utilisation of existing capacity, this decision enables a helpful option to provide it with further short-term growth, without an expectation for additional capex,” he said.
Despite heavy investment in technology, Ocado’s grocery business has faced challenges since the pandemic. At its 2021 peak, the online grocer was valued at £22bn, but it is now worth around £3bn.
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