Morrisons and Amazon announce new supply agreement

Text from the Morrisons press release follows:

Morrisons and Amazon are today announcing a new supply agreement. In the coming months, hundreds of Morrisons products will be available to Amazon Prime Now and Amazon Pantry customers. Morrisons will provide a wholesale supply service to Amazon, allowing Amazon’s customers access to a wide range of Morrisons ambient, fresh and frozen products. 

We are focussed on our six priorities to make the supermarkets strong again. In addition, we have an opportunity to build a broader business that complements our supermarkets and is consistent with our commitment to pursue capital light growth. Wholesale supply enables this by growing volumes and leveraging our manufacturing, distribution and wholesale capabilities. 

David Potts, Chief Executive, said of the Amazon agreement: 

“Today’s agreement is built on Morrisons unique strengths as a food maker. The combination of our fresh food expertise with Amazon’s online and logistics capabilities is compelling. 

“This is a low risk and capital light wholesale supply arrangement that demonstrates the opportunity we have to become a broader business. We look forward to working with Amazon to develop and grow this partnership over the coming months.” 

In addition, Morrisons has been in discussions with Ocado to grow Morrisons.com and an agreement in principle has been reached. This involves Morrisons taking space in Ocado’s new Customer Fulfilment Centre (“CFC”) in Erith, and Ocado delivering a store pick solution for Morrisons that leverages Ocado’s technology and Morrisons store assets. When implemented, this would enable Morrisons.com, working with Ocado, to sell to customers all over Great Britain. 

This amended agreement is subject to detailed terms being agreed and will only proceed if it enables Morrisons to achieve profitable growth online. There can be no certainty that an agreement will be concluded.

Industry View:

Hannah Maundrell, editor-in-chief at www.money.co.uk said: 

“Rumours that Amazon are stepping into the grocery delivery space have been rife for a while. It’s interesting they've chosen Morrison as a partner - an astute move for them given the supermarket chain has not had an easy ride.  

It'll be interesting to see how the price point differs as Morrisons have been angling themselves as a budget brand for some time, which could be why Amazon have chosen them over others.  
 
Online shoppers are bound to benefit from even lower prices, with more competitors the supermarkets will be doing everything they can to keep their digital customers clicking and will need to act quickly to position themselves as true contenders against the king of online retail, Amazon.”

Image: James W Copeland / Shutterstock.com 

Source : Morrisons Press Release
www.morrisons-corporate.com