UK grocer Asda taps Ocado to revamp online business
Asda and Ocado Announce Strategic Partnership to Transform Online Grocery Operations
By James Davey and Raechel Thankam Job
LONDON, May 29 (Reuters) - British supermarket group Asda has struck a partnership with technology firm Ocado to overhaul its online business across the UK as it seeks to stem market share losses, the companies said on Friday.
Market Impact and Ocado’s Position
The deal is a boost for Ocado after a major setback last year, when its North American partners - Kroger in the U.S. and Sobeys in Canada - closed some robotic customer fulfilment centres, citing weaker-than-expected demand.
Ocado shares rose 12.3%, paring losses over the last year to 10.3%.
Asda’s Market Share and Performance
Asda, majority owned by private equity firm TDR Capital, is Britain's third-largest grocer but has been losing ground to rivals including industry leader Tesco, number two Sainsbury's and discounters Lidl and Aldi. Asda's core profit slumped 33% in 2025.
Asda trades from about 1,100 stores and already runs a sizeable online grocery business, handling more than 700,000 e-commerce orders a week. Its annual online sales of about £3 billion ($4 billion) equate to about 1.5% of the UK grocery market. Its total share is 11.5%.
Details of the Asda-Ocado Deal
Technology Upgrade and Implementation
REPLACE AND UPGRADE
Under the deal, Asda will replace and upgrade its existing e-commerce infrastructure using Ocado's technology, with solutions rolled out across stores and "dark stores" - which fulfil online orders and are not open to the public - from 2027.
"These solutions include Ocado's front-end (webshop), in-store fulfilment, and software to support last mile planning and route efficiency," Ocado said.
Enhanced Online Services and Aggregator Fulfilment
The partnership will allow Asda to offer a full range of online services, including scheduled and short lead-time orders, as well as click and collect. Asda will also use Ocado’s platform to fulfil and deliver orders placed through aggregators such as Uber Eats, Deliveroo and Just Eat.
"Partnering with Ocado will strengthen our online offer," Allan Leighton, Asda's executive chairman, said.
Future Prospects and Industry Context
Ocado CEO Tim Steiner told Reuters he hoped the deal "was the start of a long journey together," noting that in the future Asda could sell Ocado products.
Ocado already has a UK partnership with Morrisons, the number six grocer, and a 50% stake in Ocado Retail, its online delivery joint venture with Marks & Spencer. M&S declined to comment.
Financial Implications and Analyst Insights
Ocado said the Asda deal is not expected to have a material financial impact in its 2025/26 year. It reiterated that it expects to turn cash-flow positive in the second half of 2025/26 and for the full year in 2026/27.
JPMorgan analyst Marcus Diebel estimated the deal is worth an annual 20 million pounds of incremental core earnings for Ocado from 2027.
Potential for Further Deals
As for more deals, Steiner said Ocado is "engaged in a lot of conversations in many places."
($1 = 0.7457 pounds)
(Reporting by James Davey in London and Raechel Thankam Job in Bengaluru. Editing by Kate Holton and Mark Potter)
