Morrisons has announced it will go live with its online
grocery business in January 2014 through a long-term agreement with Ocado.
While the Morrisons.com grocery website will have a clear Morrisons look and
feel, fulfilment will be from Ocado’s recently opened Dordon fulfilment centre,
with customer deliveries through a Morrisons-liveried fleet.
The agreement includes a technology and services arrangement
and a sale and leaseback of property and equipment at Dordon. Morrisons will
make an initial payment of up to £170 million to acquire Dordon and associated
mechanical handling equipment, as well as a licence and integration fee. A
further £46 million will be invested to expand the fulfilment centre in order
to accommodate the Morrisons range, integrate it with Morrisons’ systems and
establish a network of delivery spokes. Ocado will also receive a share of
positive Morrisons.com earnings, expected in 2017/18. Morrisons anticipates its
online groceries business to incur a further £25 million in development costs,
taking its total business development investment to £65 million this year.
In a statement, Ocado said its customers and the current
contractual agreement with Waitrose will remain unaffected by these
arrangements.
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