Re­tailer in deal to ex­tend its on­line gro­cery reach

Yorkshire Post - Business - - FRONT PAGE -

MOR­RISONS HAS an­nounced plans to ex­tend its own on­line gro­cery de­liv­er­ies to the whole of the UK un­der a new agree­ment with Ocado.

The Brad­ford- based gro­cer will take space in a new Ocado Lon­don ware­house, which will en­able it to de­liver to ar­eas south of the River Thames where it doesn’t cur­rently de­liver.

Ocado will also pro­vide Mor­risons with soft­ware to ful­fil on­line or­ders from its own stores, al­low­ing Mor­risons to en­ter the Scot­tish and North East on­line mar­ket for the first time.

Mor­risons signed a £ 170m con­tract with Ocado in 2013, pro­vid­ing the su­per­mar­ket with its first on­line de­liv­ery ser­vice.

Mor­risons said its amended agree­ment with Ocado is sub­ject to de­tailed terms be­ing agreed and will only pro­ceed if it en­ables Mor­risons to achieve prof­itable growth on­line. It added that there can be no cer­tainty that an agree­ment will be con­cluded.

An­a­lyst Bruno Monteyne at Bern­stein said: “Im­por­tantly this new deal with Ocado is not yet done but de­pends on Mor­risons achiev­ing prof­itable growth on­line. What a nice way to put pres­sure on this part­ner­ship.

“CEO David Potts is mak­ing his own mark on Mor­risons’ che­quered deal- mak­ing past. In 2015, he closed the con­ve­nience chain that his pre­de­ces­sor Dal­ton Phil- lips ex­pen­sively built by buy­ing Block­buster stores.

“Dal­ton Phillips then spent more than £ 200m on an on­line deal with Ocado that gives him ac­cess to only 50 per cent of Mor­risons’ cus­tomer base. David Potts al­ready in­di­cated that while it is great for cus­tomers, it isn’t great fi­nan­cially and op­er­a­tionally other so­lu­tions seem more ap­pro­pri­ate ( click and col­lect).”

Clive Black at Shore Cap­i­tal raised the ques­tion of whether Mor­risons’ talks with Ocado could be a “re- ne­go­ti­a­tion of what we be­lieve has been an un­duly oner­ous con­tract”.

Last month Mor­risons, which has just un­der 500 stores, re­ported a 0.2 per cent rise in like­for- like sales in the nine weeks to Jan­uary 3, mark­ing a turn­around af­ter re­cent hefty sales de­clines.

DAVID POTTS:

Chief is ‘ mak­ing his own mark on Mor­risons deal­mak­ing past’.

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