Morrisons promises distinct ‘look and feel’ for online food site as Ocado deal confirmed

Morrisons has agreed a 25-year deal with online grocer Ocado that will see it launch an online grocery service by January 2014.

Morrisons' Chirstmas ad

The tie-up, first mooted in March, will a see the relaunch of with grocery lines and “a clear Morrisons look and feel”, the supermarket says in a statement. Branded delivery vans will be seen on the road from January.

The supermarket has lagged its ‘big four’ rivals Tesco, Asda and Sainsbury’s in entering the fast growing online grocery market with its failure to do so identified by the supermarket as a drag on sales.

Chief executive Dalton Philips insisted as recently as March that it would only launch an online grocery service when it could be sure it would be distinct and profitable.

He says in a statement: “This agreement is a significant strategic step for Morrisons.  From a standing start, Morrisons will be competing in the fast growing on-line 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.”

The supermarket has been laying the groundwork for a move into online grocery since acquiring a 10 per cent stake in Fresh Direct, the New York based fresh food delivery network, in 2011. It already has an e-commerce offering in children’s clothing retailer Kiddicare and Morrisons Cellar, an online wine delivery service launched last year.

Ocado insists the deal with Morrisons will have no impact on its 13-year-old partnership with Waitrose to deliver groceries. However, Waitrose managing director Mark Price questioned the legitimacy of a tie-up last week, telling the Telegraph he would reject any deal.

A Waitrose spokeswoman says it has requested to see the detail of the deal and the operating arrangements. “Meanwhile, we have instructed lawyers so that we can get a clear and unequivocal view of the contract and examine what might constitute a breach. This process will take some time so we are unlikely to comment again in the near future,” she adds.

Morrisons will pay Ocado £170m to acquire its Dordon distribution centre in the Midlands . A further £46m will be invested in expanding the centre to accommodate the supermarket’s range and integrate its IT systems.

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