Mark Price, the managing director of Waitrose, has said he will reject a deal between Ocado and Morrisons.
The delivery agreement between Ocado and Waitrose is due to run until 2020. However, there have been numerous reports on Ocado’s meetings with Morrisons as the supermarket looks to move its operations online. Both Ocado and Morrisons confirmed last week that the talks were ongoing, which has resulted in questions being asked over Waitrose’s long-term future with Ocado.
Speaking on the possibility of a deal to the Telegraph, Price said: “I would never knowingly sign a contract with Ocado that agreed to them working with another retail competitor,”
“We have moved to defcon one [on online expansion] because we don’t know where this is going to end up and we are now working on adding considerable extra capacity to Waitrose.com.”
This extra capacity includes increasing its “dark stores”, which are used to provide its own online deliveries, from one to three.
If Ocado did do a deal with Morrisons, it could risk a breach of contract with Waitrose and possible legal action and demands for compensation. The current contract between Waitrose and Ocado names the major UK retailers that Ocado cannot deliver for, with Morrisons being one of them.
“If a contract is signed between Morrisons and Ocado we will want our legal team to examine it immediately to ensure there are no breaches of the contract,” Price said.
In an interview with The Telegraph last week, Sir Stuart Rose, the new chairman of Ocado who has taken over from Lord Grade, said that Ocado would consider providing space in its two delivery centres for Morrisons. However, this proposal has not gone down well with Waitrose, and its parent company John Lewis Partnership, as it provided the seed capital for Ocado and claims it heped it considerably in building its brand.