Supermarket group Morrisons will gradually end deliveries from Ocado's automated warehouse in Erith, southeast England, and instead increasingly use the online grocer's site in Dordon, central England, Ocado Group said on Thursday.
Ocado said Morrisons, a partner since 2013, would also fulfil more online orders from its store network using Ocado technology.
The move means Ocado Retail - a joint venture between Ocado Group and Marks & Spencer – has the option to use additional capacity at Erith, Ocado said.
The joint venture, Britain's fastest growing supermarket business, according to monthly industry data, is approaching full capacity in its current network.
'Short-Term Growth'
"As Ocado Retail moves towards full utilisation of existing capacity, this decision enables a helpful option to provide it with further short-term growth, without an expectation for additional capex," said Ocado Group CEO Tim Steiner.
Online's share of Britain's total grocery market was about 7% before the onset of the COVID-19 pandemic in 2020. It peaked at about 15% during the crisis, and is currently just under 13%, according to industry data.
Ocado said the cash impact of the changes was expected to be broadly neutral across 2025 and 2026.
Morrisons, Britain's fifth biggest grocer, has been owned by US private equity firm Clayton, Dubilier & Rice since 2021.
Ocado Retail, a joint venture between Ocado Group and Marks & Spencer, has reported a 15.5% increase in retail revenue in the third quarter of its financial year.
The British group reported revenue of £658 million (€783 million) in the period, citing 'continued momentum' driven by 'unbeatable choice, unrivalled service and reassuringly good value'.
The average selling price of products decreased by 0.4%, set against a UK grocery inflation rate of 2.0%, it added.
