Asda has agreed a deal with Ocado to use its technology for home deliveries, in a move aimed at strengthening the supermarket’s online business from next year. Under the agreement, Ocado software will be used for deliveries from Asda stores and from “dark stores” — smaller warehouses not open to the public — from early 2027. The system will also support orders placed through third-party delivery apps such as Uber Eats, Deliveroo and Just Eat, as well as click-and-collect services through Asda’s website and apps.
The partnership comes as Asda seeks to reverse recent sales weakness under its private equity owners, TDR Capital and Mohsin Issa, while competing more effectively against German discount rivals Aldi and Lidl. According to Kantar data, Asda’s share of the UK grocery market has fallen from 14.3% before the 2021 takeover to 11.5%, leaving it only slightly ahead of Aldi on 10.8%.
For Ocado, the deal offers a boost after years of setbacks in its efforts to turn its technology-led grocery model into a consistently profitable business. Ocado is best known for its automated warehouse system, which uses robots to pick and pack online grocery orders, but the Asda agreement will not use those robot warehouses. Instead, it will rely on Ocado’s underlying technology to help manage Asda’s delivery operations.
In the UK, Ocado operates Ocado.com as a joint venture with Marks & Spencer and previously handled deliveries for Waitrose. Despite its profile as a pioneer in online grocery delivery, Ocado has rarely made a profit since it was founded 26 years ago. Its valuation surged during the coronavirus pandemic, when lockdown-driven demand for online shopping pushed its market value above £22 billion, but its share price later slumped sharply. Before the Asda announcement, Ocado shares had fallen from more than £27 to £2.08.
Shares in Ocado rose 9% on Friday morning after the announcement, making the company the top riser on the FTSE 250.
The group’s track record overseas has also been mixed. In the United States, supermarket chain Kroger said last November that it would close three warehouses using Ocado’s equipment. Two months later, Ocado disclosed that Sobeys in Canada was closing its Calgary facility.
Asda executive chair Allan Leighton said the partnership would help improve the customer experience and support the supermarket’s growth by providing a more consistent and higher-quality online service from ordering to delivery. Ocado chief executive Tim Steiner said Asda had chosen Ocado to support the next phase of its online expansion, describing the UK grocery sector as highly competitive and increasingly shaped by technology, scale and innovation.
The agreement marks a significant step for both companies: Asda gains technology to bolster its digital grocery offer, while Ocado secures another major retail partner at a time when investors are watching closely for signs that its platform can deliver stronger commercial returns.
