Morrisons ends deliveries from Ocado's Erith warehouse

In the United Kingdom, Morrisons announced a strategic shift regarding its delivery operations from Ocado's Erith warehouse. The supermarket chain decided to end its partnership with Ocado for deliveries from this specific location, opting instead to fulfill customer orders using its own network of shops and its other warehouse located in Staffordshire. This decision is part of Morrisons' broader strategy to strengthen its retail operations by leveraging its own logistics capabilities while simultaneously continuing to utilize Ocado’s advanced technology for online delivery. This technology will remain integrated into Morrisons' online ordering system, enabling the supermarket to maintain a level of operational efficiency and customer service. As a result of this major change, Ocado also indicated that there will be an opportunity to repurpose the spare capacity at the Erith site for use by Ocado Retail, which is Ocado's joint venture with Marks & Spencer. The latter has been identified as needing additional capacity in the short term to meet customer demands. Ocado has stated that discussions are ongoing with Ocado Retail about how to best utilize the Erith site's resources. They also mentioned that the financial implications of this shift are expected to have a 'broadly neutral' cash impact across the years 2024 and 2025. This indicates a calculated approach by Ocado as it manages the potential fallout from losing Morrisons as a delivery partner. Investors responded negatively to the news, which led to a significant decrease in Ocado's share price, dropping by 6 pence as concerns over the future implications for the company’s revenue and market position surfaced. The move by Morrisons reflects a growing trend in the grocery sector, where retailers are seeking to operate independently and build their logistical capabilities rather than relying solely on third-party companies. This trend is indicative of a broader strategy among supermarket chains to gain control over their supply chains and distribution networks, especially in response to the changing consumer behavior brought about by the digital retail revolution. The decision, which echoes a trend seen across multiple sectors, raises important questions about the future of collaborations between retailers and technology providers. As Morrisons shifts away from reliance on Ocado for deliveries, the marketplace will observe closely how both companies navigate this transition and what it means for competition in the grocery and technology spaces in the United Kingdom.