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Morrisons strikes agreement with Ocado

Morrisons strikes agreement with Ocado

Morrisons is moving into the online grocery sector after entering into an agreement with internet shopping company Ocado.

The supermarket stated that the deal will mean that the service could be launched by January 2014 allowing it to compete with the likes of Tesco, Asda and Waitrose that already offer this option to its customers. Morrisons said that it will be acquiring Ocado's distribution centre in Dordon in the Midlands as part of the agreement while the website and delivery vans will be Morrisons branded.

Ocado will receive an initial payment of £170 million from the supermarket for its distribution centre while a further £46 million will be provided to expand the facility and establish a delivery network. Morrisons is expecting a return on its investment over the next three to four years once the online store is up and running. Ocado added that it will still continue its contractual obligation to Waitrose and stated that the Morrisons deal would not affect any other business.

Dalton Philips, chief executive of Morrisons, 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."

Morrisons is set to implement its own kind of internet shopping which has already been taken up by a number of other major retailers. Research by analysts at IGD stated in September 2012 that they expected the market to almost double in value by 2016 reaching a whopping £11.2 billion.

As part of the study they compared the major retailers in terms of which has the best online grocery service. Waitrose was deemed to have the most competitive offers by allowing customers spending £50 or more to benefit from free delivery at any time of the day. Ocado was commended for having the longest delivery hours, between 06:00 BST and 23:30 BST, giving customers much more flexibility when shopping.


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