Morrisons is shifting towards in-store fulfilment, reducing reliance on large centres.
- The transition will gradually phase out deliveries from Ocado’s Erith centre.
- Online orders will be processed through Ocado’s AI technology in stores.
- This approach ensures customers have complete access to Morrisons’ Market Street offerings.
- Ocado anticipates market growth without additional capital expenditure.
Morrisons has announced a strategic shift in its fulfilment strategy, moving towards processing online orders directly in stores using advanced technology provided by Ocado. This shift marks a departure from the traditional model of using large fulfilment centres, as the supermarket chain aims to enhance its online grocery service while addressing logistical challenges.
The supermarket will gradually reduce its operations at Ocado’s Erith fulfilment centre. Instead, it plans to increase the volume of orders handled by the Midlands centre and within its store network. By leveraging Ocado’s AI-powered technology, Morrisons can fulfil online orders more efficiently in-store, providing a seamless shopping experience for customers across England, Wales, and Scotland.
According to Morrisons CEO, Rami Baitiéh, the decision to move towards in-store fulfilment is largely driven by increased demand for their online services. He assures customers will continue to receive the full Market Street offer without disruption. This strategy not only aims to optimise operations but also enhances accessibility to their extensive product range.
Ocado’s CEO, Tim Steiner, expressed support for this transition. He emphasises that reducing reliance on the Erith centre affords Ocado Retail the opportunity to focus on growth without the need for significant additional capital outlay. Steiner noted that this move will help maintain a strong position in the competitive UK online grocery market.
This strategic collaboration between Morrisons and Ocado comes after Ocado’s grocery division faced various challenges post-pandemic. The company’s valuation saw a significant decrease from £22 billion at its peak in 2021 to approximately £3 billion currently, underscoring the need for adaptive strategies to stay competitive.
Morrisons and Ocado are realigning their focus to bolster online grocery services through innovative in-store fulfilment strategies.
