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."

Discussion

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

Latest

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
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message
Lynx unleashes £9m 'Peace invasion' campaign
Social Brands 100 Youth: Pizza Hut most social youth brand in UK
Cheryl Cole is wild and arresting in new L'Oreal work
Morrisons told not to show alcohol ads during YouTube nursery rhymes
O2 head of brand Shadi Halliwell departs after 23 years at company in restructure
Tesco hit by further sales decline as it turns to digital Clubcard and social network
Branding guru Wally Olins dies aged 83
Duracell short film captures epic Transatlantic voyage
Ash runs Tinder experiment to show smokers are less desirable to opposite sex
British Airways teams up with Gerry Cottle Jnr for summer of rooftop film screenings
Arklu says 'girls can be superheroes too' with doll design competition
Coke enters squash market with Oasis Mighty Drops
Virgin Galactic signs up Land Rover as space flight sponsor
Motorola marketer Andrew Morley departs as Google gears up for sale to Lenovo
US Airways apologises after tweeting obscene image at a customer
Mumsnet admits users' emails and passwords accessed via Heartbleed bug