Waitrose eyes rapid expansion of online grocery business

Waitrose is aiming to treble the size of its online business to £1bn annually following the end of its partnership with Ocado, by teaming up with one of the grocery delivery specialist’s co-founders.

Waitrose is targeting rapid online revenue growth over the next three years with the help of a new partner, Today Development Partners.

The technology business has been set up by Jonathan Faiman, a former Goldman Sachs banker who left Ocado in 2009, and Mo Gawdat, the former chief business officer of Google X, the search engine’s innovation lab.

Waitrose, which is part of the John Lewis Partnership, currently sells its products via Waitrose.com and Ocado.

But from September next year, its deal to supply Ocado will come to an end after the online grocery specialist signed a £750m deal with Marks & Spencer.

TDP will help Waitrose develop technology for three new automated distribution centres, so that the supermarket can expand its business and take on Ocado’s robot-backed service.

It is understood that Waitrose will have a small stake in the new technology business, which could work for other retailers in future.

The Waitrose.com service, which was launched in 2000, is currently served from stores and a distribution centre in Coulsdon which opened in 2015. A further distribution centre to serve the north London area is already in development, in addition to the three automated facilities planned in partnership with TDP.

Rob Collins, managing director of Waitrose, said: “Waitrose.com is a popular and efficient home delivery service that is already growing strongly ahead of the market. The plans announced today represent a clear commitment to achieve rapid step-change in Waitrose.com’s capacity and capability as we build a modern, well-invested digital business that is fit for the future.”

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Collins has previously said he is confident that shoppers who currently use Ocado to buy Waitrose goods will migrate to Waitrose.com.

One analyst poll also suggested that Ocado risks a customer exodus as a result of its M&S tie-up as shoppers did not see it as an adequate replacement for Waitrose. In March, Waitrose said its online grocery sales had climbed 14% in the year to January and it was aiming to double sales by September 2020.

Faiman, the former chief operating officer of Ocado who has known the group’s chief executive and co-founder Tim Steiner since nursery school, sold his stake in the grocery business some years ago. He has since invested in private businesses including an $150m stake in oil venture Neos in 2015.

He said: “I am delighted and privileged to be back within the John Lewis Partnership family and we will deliver for Waitrose.com customers the world’s best digital home delivery service.”



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