Morrisons has announced plans to reshape its online grocery delivery strategy, gradually reducing operations at Ocado's Erith fulfilment centre while expanding its use of Ocado's technology and alternative distribution channels.

The supermarket will increasingly process online orders through Ocado's Dordon Customer Fulfilment Centre in the Midlands and implement in-store fulfilment using Ocado's AI-powered technology. This strategic shift comes after a long-standing partnership between the two companies that began in May 2013.

Morrisons' chief executive Rami Baitiéh explained the rationale behind the change, stating: "We have a successful partnership with Ocado and we value their expertise and their technology highly. As our online business continues to grow we have decided to process a greater share of our online volume through the Dordon CFC and with in-store fulfilment – which gives our customers full access to our unique Market Street offer."

The move comes at a time when online grocery shopping has experienced significant fluctuations. Before the COVID-19 pandemic, online grocery sales represented about 7 per cent of the UK market. This peaked at approximately 15 per cent during the pandemic and currently sits just under 13 per cent.

Ocado Group's chief executive officer Tim Steiner viewed the development positively, commenting: "With our world-leading technology, Ocado Retail and Morrisons offer amazing propositions in the UK online grocery market. As Morrisons reduce their operations at Erith and build their volumes in other parts of the network, we are working with them to ensure seamless continuity of service to their customers."

Importantly, Baitiéh confirmed that Morrisons.com will "continue to service every postcode in England, Wales and Scotland, with no impact to customers." The company aims to maintain its market reach while optimising its delivery infrastructure.

The strategic shift provides Ocado Retail – a joint venture between Ocado Group and Marks & Spencer – with additional capacity as it approaches full utilisation of its existing network. Ocado Group indicated that the cash impact of these changes is expected to be broadly neutral across 2025 and 2026.

This development comes against the backdrop of challenging times for Ocado, whose grocery business has experienced significant valuation changes over the past several years. The delivery firm is currently worth around £3 billion, a fraction of its £22 billion peak in 2021.

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