May 20, 2013

Morrisons forms £216m collaboration with Ocado to launch online services

British supermarket chain Wm Morrison Supermarkets (Morrisons) has formed £216m collaboration with e-Commerce firm Ocado to launch online groceries delivery service by January 2014.

By admin-demo

British supermarket chain Wm Morrison Supermarkets (Morrisons) has formed £216m collaboration with e-Commerce firm Ocado to launch online groceries delivery service by January 2014.

The agreement includes a technology and services accord and a sale and leaseback of property and equipment at Dordon Customer Fulfilment Centre (CFC) in Midlands.

As per the terms of the agreement, Morrisons will make an initial payment of £170m towards purchase of Dordon and its equipments and license and integration charges.

The retailer further plans to invest £46m to expand the fulfillment centre in order to align it Morrisons’ product range and systems to establish a delivery network.

Commenting on the developments, Morrisons chief executive Dalton Philips remarked that the alliance is part of company’s strategy to further its business.

"From a standing start, Morrisons will be competing in the fast growing on-line channel by the end of this year with a really compelling proposition," added Philips.

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The agreement also includes terms mandating Morrisons to pay annual service and research and development (R&D) costs besides providing option for the joint development of new CFCs over the time-period of the pact.

Meanwhile, rival retailer Waitrose expressed strong objection for the alliance citing the agreement Waitrose signed with the e-Commerce firm.

Waitrose claimed that it would to resort to legal proceedings had it partnered with any rival supermarket chains.

However, Ocado chief executive Tim Steiner explained: "We will continue to source products under our long term agreement with
Waitrose, and our customers will continue to benefit from the existing high levels of service, wide range of products and competitive prices that they currently enjoy."

Morrisons also plans to invest a further £25m to boost its new food.com business, thereby taking its full year business development investment to £65m.