Supermarket Morrisons is to start its online groceries business by the end of this year after unveiling a tie-up with delivery firm Ocado today.
The launch will see the chain use Ocado’s recently opened distribution centre in Warwickshire for deliveries through a Morrisons-liveried fleet.
The 25-year deal, which involves Bradford-based Morrisons paying up to £170m to Ocado to acquire the site and equipment, is controversial because Ocado is already linked with Waitrose, exclusively delivering the supermarket’s products.
Morrisons chief executive Dalton Philips said: “This agreement is a significant strategic step for Morrisons.
“From a standing start, Morrisons will be competing in the fast-growing online channel by the end of this year with a really compelling proposition.
“The customer gets our affordable fresh food delivered by Ocado’s state-of-the-art distribution system.”
Waitrose is reported to be examining the tie-up after boss Mark Price said last week that he “would never knowingly sign a contract with Ocado that agreed to them working with another retail competitor”.
Ocado chief executive Tim Steiner said today’s agreement would have no impact on its existing arrangements.
He added: “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.”
With the addition of planned new capacity, the Ocado site at Dordon, Warwickshire, will be able to handle up to 190,000 orders per week at its peak. Around half of this will be available to Ocado.