Asda teams up with Ocado to revamp online grocery in Allan Leighton turnaround push
Asda has turned to Ocado Group in a bid to rescue the online grocer that has held back competition for the best part of a decade, signing a long-term deal that will see the Hatfield-based technology company rebuild the supermarket’s digital shop window, in-store picking and last-mile delivery network.
Under the deal, announced this week, Asda will use Ocado’s Smart Platform, the same fulfillment platform used by more than 1,000 grocers in 11 countries, for its consumer-facing website and app, its in-store order fulfillment, and logistics systems that deliver vans to around 1,100 UK stores. The rollout is scheduled to begin in 2027 with a revamped online shopping experience, before progressing to selection and delivery improvements.
The tie-up is the boldest move yet for chairman Allan Leighton, who returned to the Leeds-based club in late 2024 after a quarter of a century, and is set to be a key plank of his turnaround plan. Leighton, who made his mark in British retail during the Asda Walmart boom, has spent the past 18 months investing in price, availability and store standards while trying to halt a years-long market-share slide.
“We know that continued success in this highly competitive market depends on providing a great customer experience every time they shop,” said Leighton. “Partnering with Ocado will strengthen our online offering and provide a consistent and high-quality experience to millions of consumers, from ordering to delivery, while supporting our growth formula.”
The decision reflects a strong commercial reality. According to Kantar Worldpanel, Asda’s share of the British grocery market has fallen to less than 14 percent, leaving it third behind Tesco and Sainsbury’s and within striking distance of Aldi. Online, where Tesco and Sainsbury’s have long reigned supreme and Ocado Retail has set the benchmark for service, the gap has become even more stark. Industry analysts have repeatedly cited a lackluster digital experience, limited delivery slots and inconsistent in-store selection as drags on Asda’s growth.
Why Ocado, and why now
For Ocado, the deal is a much-needed vote of confidence in the Solutions division which has been in turmoil for several years, with US partner Kroger scaling back its commitments to robotics warehouses. Adding Britain’s top five grocers to the customer list is significant, not least because it suggests the company’s low-cost in-store fulfillment software, instead of the capital-intensive automated warehouses it named, is becoming a staple of the trade.
Tim Steiner, chief executive of Ocado Group, said the UK remains “one of the most competitive and fastest-growing grocery markets in the world, where technology, quality and continuous innovation are critical for retailers looking to maintain leadership positions”. He added that the platform now handles more than 70 million orders a year worldwide.
For Asda, the reason is equally clear. Building a modern e-commerce stack in-house would have taken years and tied up scarce capital at a time when the business was facing huge debt acquired from the Issa brothers in 2021 and the acquisition of TDR Capital. Buying shelf power from a proven specialist allows the supermarket to focus management’s attention on basics, price, range and store experience, while pushing its online proposition forward in tandem. As Ocado has repeatedly argued, structural changes to online grocery shopping since the pandemic have not stopped, and return costs are rising.
What customers should expect
In practical terms, consumers should notice a smoother website and app from 2027, with improved search, more relevant product recommendations and easier payments. Behind the scenes, Ocado’s in-store fulfillment software is designed to help pickers work faster and more accurately, while route planning tools should deliver more deliveries per van, which translates, Asda hopes, to more available locations, fewer changes and better on-time performance.
Asda has confirmed that it will retain full control of pricing, range and the wider customer proposition. The partnership is technology-led rather than a cash-out plan, closer in spirit to software licensing than the shared business model of Ocado Retail Group working with Marks & Spencer.
The move also coincides with Asda’s long-term pivot towards online shopping, which has prompted significant operational changes within the business and put pressure on parts of its stores. Leighton’s bet is that a reliable online proposition, married to renewed in-store price competition, is the only viable way back to growth for a chain that built a reputation for value but, itself, has drifted in recent years.
Whether Ocado’s technology can deliver that answers a different question. Construction of this scale rarely starts on schedule, and the 2027 start date gives competitors ample time to extend their lead. But after years of advanced preparation, Leighton has finally placed a significant bet – and tied Asda’s online future to one of Britain’s few technology companies to truly operate at supermarket scale.
