UK-based supermarket group Morrisons plans to phase out deliveries from Ocado Group‘s automated customer fulfilment centre (CFC) in Erith, Kent to a facility in Dordon, Warwickshire.
The move is part of a broader collaboration with Ocado that dates back to 2013, which helped the retailer establish a strong online grocery service.
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Morrisons.com is powered by the Ocado Smart Platform (OSP) which also supports the online operations of other global grocery retailers.
Morrisons will gradually cease using its automated warehouse in Erith.
Instead, the retailer will focus on increasing delivery volumes from Ocado’s central England site in Dordon and expand its network of physical stores in which online orders are fulfilled using Ocado’s AI-driven in-store fulfilment technology.
Morrisons CEO Rami Baitiéh said: “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. Morrisons.com will continue to service every postcode in England, Wales and Scotland, with no impact on customers.”
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By GlobalDataAs Ocado Retail continues to expand and approaches full capacity at its existing facilities, this shift in Morrisons’ strategy creates an opportunity to allocate additional capacity to Ocado Retail in the near term, supporting its continued growth in the online grocery space.
Ocado Retail is a joint venture between Ocado Group and Marks & Spencer.
Ocado Group anticipates that the net cash impact will be approximately neutral for the fiscal years 2025 and 2026.
Ocado Group CEO Tim Steiner said: “With our world-leading technology, Ocado Retail and Morrisons offer amazing propositions in the UK online grocery market. 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. As Morrisons reduces its operations at Erith and builds 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.”
Morrisons has been owned by US private equity firm Clayton, Dubilier & Rice since 2021.
In September 2024, Morrisons announced a 2.9% rise in group like-for-like sales, excluding fuel and value-added tax, in the third quarter of the fiscal year 2023/24.
