Although Morrisons, an Bradford, England based supermarket group, kicked out its CEO Dalton Phillips, Tim Steiner, CEO of its long-term partner, delivery company Ocado, is not concerned, and feels the deal is rock solid. Morrisons agreed to a 25 year deal with Ocado, which thanks to the strength of holiday sales, posted its first post-tax profit since the company was founded in 2000. Duncan Tatton-Brown, finance director of Ocado told the Daily Telegraph, “It is not something we would expect, and we’re protected by the contract, anyway.”
Tim Steiner said, “Our focus remained on delivering the highest service level at this very important time for customers, while offering the widest range at competitive prices.” Ocado reported a 14.8% increase in December sales with 40% more items for both Morrison’s and Ocado than the same period in 2013.
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While the deal with Morrisons may seem secure, the partnership with Waitrose may be more shaky, as Waitrose can pull out of the deal in September, if it so chooses. It is possible that Waitrose may chose to fly solo and run its own grocery delivery operations. In addition, Ocado could face some heat from low cost competitors, as the supermarket industry in Britain facing cutthroat competition, with prices slashed dramatically.
