Morrisons renegotiates terms with Ocado

Supermarket giant Morrisons has agreed new terms with online grocer Ocado. Morrisons says that this will allow it to extend Morrisons.com coverage across the UK.

In a statement, Morrisons said: “Morrisons has re-negotiated some components of the original contract with Ocado. The principal changes are: the restriction on store pick has been lifted, the profit share agreement will be cancelled and the Research & Development (R&D) fee will be reduced.”

Morrisons added: “Ocado will develop a store pick solution for Morrisons.com. Prior restrictions will be lifted, enabling Morrisons to fulfil online orders via store pick anywhere in Britain, including all areas not currently covered by Morrisons.com.

“Once the store pick model becomes operational, Morrisons contractual obligation to share a proportion of its future online profits with Ocado will end. At this point the exclusivity restrictions on Ocado will also be reduced, although it will still be prohibited from serving certain grocery retailers.”

Morrisons has also agreed to take capacity in Ocado’s new Customer Fulfilment Centre (“CFC”) in Erith – and it said the arrangement “has significantly lower upfront capital costs than the original operating agreement and includes an option to break after five years”. Once Morrisons.com is operational from Erith, Morrisons will pay Ocado a reduced annual R&D fee.

Commenting on the renegotiated terms with Ocado, David Potts, Chief Executive of Morrisons, said: “The new investments in online growth are further examples of Morrisons building a broader business and will allow millions more customers all over Britain to enjoy Morrisons good quality fresh food and great value for money. As food maker and shopkeeper, we continue to ‘follow the customer’ and move towards achieving capital light, profitable growth online.”

The two companies have been working together since 2013. Amazon and Morrisons have been working together since the beginning of this year. It is not known how this menage a trois will work out long term…

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