Morrisons eyes stronger ties with Amazon after Ocado fire

Morrisons could beef up its tie-up with Amazon after it “relaxed” its exclusive deal for online groceries with Ocado, chief executive David Potts said on Thursday.

Morrisons agreed to give up using Ocado’s automated warehouse in Erith after a fire at the online grocer’s Andover warehouse left it short of capacity. Ocado currently delivers Morrisons’ online groceries.

Morrisons won’t have to pay any fees to Ocado until they resume their relationship in early 2021, potentially boosting the grocer’s profits in the short term.

But it also revealed it will no longer have an exclusive partnership with Ocado, which it sealed in 2013. Morrisons delivers its products to Ocado’s warehouses, but its website, picking of orders and home deliveries are based on Ocado’s technology. Potts said: “There was an unplanned fire. We are important partners with Ocado, a win-win negotiation is important.”

Potts added that the temporary break could allow it to sell more products at better margins though Amazon. “We still have a requirement to become more competitive as we rebuild the company.”

Potts also said he was “satisfied” with today’s 2.3% increase in same-store sales, although it was slightly below City hopes.

Moreover, sales growth from supermarkets was only 0.2%, while wholesale sales rose 2.1%, making it the lowest retail contribution since the third quarter in 2015.

Potts said the uncertainty around Brexit put people off shopping in the quarter to May 5 and same-store sales during Easter were up 1.7%.