Ocado has dismissed suggestions it will go head-to-head when Waitrose rolls out its home-delivery service in the fourth quarter of the year, insisting the two retailers – which both sell Waitrose-brand groceries – will complement each other.

In an exclusive interview with The Grocer, Ocado finance director revealed that a new five-year contract had been signed, with a clause in the new contract between the two companies, finalised last week, limiting Waitrose Deliver's expansion within the M25, Ocado's biggest market.

Waitrose will concentrate on expanding the service in Scotland, Cornwall and Somerset – areas Ocado does not reach, said Gissing.

“Inside the M25 where we are the number one internet grocery retailer, there are restrictions on what they can or they can't do [and] they will remain,” said Gissing,

“In the parts of the UK Waitrose will roll out their service, we don't have any intention of trading. We're not in Scotland and they will roll out in Scotland. We can’t make our business work in Somerset or Cornwall but we can make it work in Birmingham, central London and Manchester. They will continue rolling out in those rural areas.”

Waitrose announced last week it would expand its Deliver service after parent company John Lewis Partnership shifted its 29% stake in Ocado to its pension fund. And there was speculation that the relationship had broken down, with Gissing recently quoted as saying that JLP was “a pain in the arse to deal with”.

But Gissing said the new deal was “great”. He was pleased JLP was no longer a shareholder as it simplified the relationship.

“It is quite difficult if you are a shareholder and a supplier to distinguish between the two. They are not always the same. It's easier for them and it's great for us,” he said.

JLP has also agreed to supply Ocado for five years, providing extra stability after the previous one-year rolling contract.

“To have certainty of supply for a five-year term is good for us and, more importantly,  it sends a strong message to customers, to suppliers, to various stakeholders because there was lots of speculation we were having trouble with our friends in Bracknell and actually we were just trying to work out the best way of taking the business forward, and the best way to get certainty of supply,” said Gissing.

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