Morrisons is transitioning to more in-store fulfilment, collaborating with Ocado’s technology while re-evaluating its online operations.
- The supermarket will cease deliveries from Ocado’s Erith centre, enhancing operations from the Midlands.
- Morrisons aims to leverage AI technology for efficient online order processing in its store network.
- Ocado’s CEO highlights the strategic shift as a path to market share growth and operational continuity.
- Despite previous investments, Ocado’s current valuation faces challenges post-pandemic.
Morrisons is set to modify its supply chain strategy by shifting to in-store fulfilment with the support of Ocado’s advanced technology. This decision reflects a strategic response to an increasing demand for their online grocery services. The grocery giant plans to discontinue use of the Erith fulfilment centre operated by Ocado, gradually shifting operations to its Midlands centre and employing AI-driven systems for order processing in its stores.
This move aims to enhance operational efficiency by processing orders closer to customers’ locations, thereby reducing delivery times and potentially improving customer satisfaction. Morrisons’ CEO, Rami Baitieh, commented on the shift by stating that it allows customers better access to the company’s distinctive Market Street offerings. Baitieh assured that the transition would not disrupt services across the UK, covering every postcode within England, Wales, and Scotland.
As Morrisons scales down operations at Erith, the focus will shift towards expanding volumes at other fulfilment nodes in collaboration with Ocado. Tim Steiner, CEO of Ocado, emphasized that their partnership with Morrisons will continue to offer robust propositions in the UK’s online grocery market, even as they reallocate resources. Steiner noted that the easing of operations at Erith would facilitate Ocado’s capacity to expand without requiring additional capital expenditure.
This strategic direction aligns with Ocado’s broader efforts to optimise its capacity utilisation. Despite significant investments in technological enhancements over recent years, Ocado has faced valuation challenges. From a high of £22 billion in 2021, the company’s market value has contracted to approximately £3 billion, highlighting prevailing challenges in the competitive online grocery landscape.
Morrisons’ strategic shift towards in-store fulfilment with Ocado’s technology marks a significant transition in addressing the evolving demands of the online grocery market.
