Ocado to Handle Asda Home Deliveries from 2027
Asda has reached an agreement with Ocado, the grocery technology company, to assume control of all home delivery operations for Britain’s third-largest supermarket beginning early 2027. This partnership was announced by both companies on Friday.
Ocado will operate delivery services using Asda’s stores and dedicated "dark stores"—warehouses designed for online order fulfillment. Customers will be able to purchase Asda products through Ocado’s website, Ocado.com, and place click-and-collect orders. Additionally, Asda will utilize Ocado’s platform to fulfill orders made via third-party apps such as Uber Eats, Deliveroo, and Just Eat.
Market Context and Strategic Goals
Under the ownership of private equity firms TDR Capital and Mohsin Issa, Asda aims to strengthen its position in the competitive UK grocery market and counter the growth of German discount chains Aldi and Lidl. According to Kantar data, Asda’s UK grocery market share has declined from 14.3% prior to the 2021 takeover to 11.5%, positioning it slightly above Aldi, which holds 10.8%.
The deal is expected to be positively received by Ocado shareholders, as the company has faced challenges in realizing profits from its advanced grocery delivery technology. Ocado operates large robotic warehouses to fulfill online grocery orders.
Ocado’s Business Background and Challenges
In the UK, Ocado runs the online supermarket Ocado.com as a joint venture and has previously conducted deliveries independently. Founded 26 years ago, Ocado has rarely posted profits. During the COVID-19 pandemic lockdowns, a surge in online grocery shopping boosted its market capitalization to over £22 billion. However, prior to the announcement of the Asda deal, Ocado’s share price had fallen from over £27 to £2.08.
Following the announcement of the partnership with Asda, Ocado’s shares rose 9% on Friday morning, making it the top gainer on the FTSE 250 index.
Ocado’s other partnerships have encountered difficulties. In the United States, the Kroger supermarket chain announced in November the closure of three warehouses using Ocado’s technology. Subsequently, in January, Ocado revealed that its Canadian partner Sobeys was also facing challenges.
Statements from Company Executives
"We know that continued success in this highly competitive market is dependent on providing a positive experience for customers every time they shop. Partnering with Ocado will strengthen our online offer and provide a consistent and high-quality experience for millions of shoppers, from order through to delivery, while supporting our formula for growth." – Allan Leighton, Asda’s executive chair
"We’re delighted that Asda has chosen Ocado to support the next phase of their online growth. The UK remains one of the world’s most competitive and fast-evolving online grocery markets, where technology, scale and continuous innovation are increasingly important for retailers looking to maintain leadership positions." – Tim Steiner, Ocado’s chief executive
