Morrisons ties up Ocado deal

ONLINE grocery distribution business Ocado has done a sale and leaseback deal with Morrisons which will see the Yorkshire supermarket giant taking over its huge distribution warehouse at Dordon near Tamworth.

In a statement to the Stock Exchange this morning accompanying its half year results Ocado – best known for distributing Waitrose products until now – said Morrisons is its first strategic customer.

It has signed a 25 year agreement with Morrisons to provide intellectual property and operational services to launch its online business.

Tim Steiner, chief executive officer of Ocado, said: ” This development reflects the growing shift we are seeing in favour of online grocery shopping in the UK and internationally, and a validation of the unique technology, IP and operating model pioneered by Ocado to exploit this growing channel. 

“The positive financial impact of this agreement and the endorsement of our business model, positions us well for future strategic developments.”
The distribution warehouse at Dordon went live with the first customer orders picked in February.  It has now reached over 35,000 orders per week (OPW).

Phase 2 development will take its capacity up to between 180,000 to 190,000 OPW at a capital cost of approximately £40m, jointly funded by Morrisons.