Ocado Group PLC on Wednesday said UK supermarket chain Morrisons will stop using one of two Ocado customer fulfilment centres that it currently uses, in favour of filling more customer orders from its own stores.

The change will free up more CFC capacity for Ocado Retail Ltd, Ocado’s joint venture with Marks & Spencer Group PLC, Ocado said.

Hatfield, Hertfordshire-based Ocado provides its online grocery picking and distribution technology to two clients in the UK - Morrisons and the Ocado Retail joint venture. It also provides the technology to other supermarket clients outside the UK.

Bradford, West Yorkshire-based Wm Morrisons Supermarkets Ltd will ‘gradually cease deliveries’ from Ocado’s Erith CFC, which is in southeast London. It will instead ‘continue building further volumes’ from Ocado’s Dordon CFC, which is outside of Birmingham.

Morrisons also will expand the use of its store network for online orders, using Ocado’s in-store fulfilment technology, Ocado said.

Ocado and Morrison have worked together since 2013.

The decision opens up CFC capacity for Ocado Retail, Ocado said.

‘As Ocado Retail continues to grow robustly and approaches full capacity in its current network, this decision now opens an attractive option to provide Ocado Retail with extra network capacity over the near term,’ it said.

‘Subject to the conclusion of our discussions with Ocado Retail’, the changes are expected to have a ‘broadly neutral’ net cash impact across financial 2025 and 2026, Ocado said.

Ocado shares were down 3.1% to 314.38 pence early Wednesday in London, while the wider FTSE 100 index was up 0.3%. M&S shares were up 0.3% to 385.60p.

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