Ocado 'playing with fire' after Morrisons talks

Ocado: in discussions with Morrisons
Ocado: in discussions with Morrisons

Ocado is "playing with fire" by discussing a partnership with Morrisons and could put itself out of business if it continues to provoke the wrath of partner Waitrose, claims Shore Capital.

The comments come after Waitrose boss Mark Price told the Sunday Telegraph he would reject a potential tie-up between Ocado and Morrisons and would ask his legal team to investigate any contract signed between the two companies.

Morrisons has entered discussions with Ocado to help it launch an online grocery business. The proposed discussions have angered Waitrose because it is a major supplier of Ocado and has a delivery agreement with it until 2020, with a break clause in 2017.

Clive Black at Shore Capital said: "We believe that Ocado is playing with fire in speaking to [Morrisons] because the group's umbilical cord to Waitrose may be cut sooner than we anticipated and Ocado cannot exist as a commercial entity without Waitrose in our view."

However, last year Ocado founder Jason Gissing told Marketing that there is "enough space for everyone" and implied Ocado could survive without Waitrose.

At the time, Gissing claimed only about 20% of its products, or 4,000 items, were from Waitrose. In yesterday's article, Price fired a warning shot at Ocado by stating he "would never knowingly sign a contract with Ocado that agreed to them working with another retail competitor".

He also hinted Waitrose, which has been able to compete with Ocado within the M25 since 2011 following the expiration of a non-compete clause, would continue to escalate pressure on Ocado’s core business.

Price said:  "We have moved to defcon one [on online expansion] because we are now working on adding considerable extra capacity to Waitrose.com."


Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now


Mark Zuckerberg lookalike turns to therapy in WeChat ad
Microsoft profits boosted by cloud computing drive
Oasis #springasmile digital campaign gets people doing good deeds
Coca-Cola: 'Don't approach bloggers with a fait accompli'
Tesco CMO Matt Atkinson: 'It is so important not to stereotype mothers'
McDonald's gives Ronald a new look ahead of global 'Fun times' social media push
In pictures: BrewDog opens first craft beer shop BottleDog for 'beer aficionados'
Facebook ad revenue leaps $1bn as it invests in targeting
Malteser or Maltesers? Mars takes Hershey trademark dispute to court
Apple Q2 profits top $10bn as iPhone sales soar
Lynx tells men not to leave love to fate
HBO captures awkwardness of watching sex scenes with parents
Primark to open first US stores with Boston chosen as flagship location
Marketing spend on the up but a reality check is needed before celebrating
Top 10 ads of the week: Jackpotjoy and BT Broadband fend off Kevin Bacon
Lidl beats Tesco to 10m Facebook fans
Center Parcs ad banned for encouraging parents to take kids out of school
Coca-Cola, Cadbury and Amazon named top brands for targeting youth market
Leaked document shows Nokia to be rebranded as Microsoft Mobile
Nike lays-off hardware staff in move that casts doubt on future of FuelBand
Greenpeace says save the bees or humans will die
What brands need to know about changes to VAT and online downloads in 2015
Jimmy Savile victims urged to claim compensation in new ad campaign
UKIP launches biggest  ad campaign and stirs up 'racist' accusations
Apple boss Tim Cook provides voiceover on ad touting firm's renewed green commitments
John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Tom of Finland's 'homoerotic' drawings made into stamps