Ocado moving to the US would leave 'a significant gap' in Britain's grocery market, retail expert warns - as analysts claim delivery giant may look to bring its robotic picking across the Atlantic amid growing tensions over £160m row with M&S

Ocado moving to the US could leave a 'significant gap' in Britain's grocery market, retail experts have warned. 

The delivery giant could be set to expand its robot-picking delivery empire into New York, amid a rapid deterioration in relations with partner M&S. 

The online grocer last month threatened to sue upmarket supermarket chain, M&S, over claims it is owed millions of pounds in payments from £750million delivery agreement struck in 2019. 

Now analysts believe that if Ocado can bring the deal it made with M&S to an end then it would likely look to move into the US market and focus instead on building its technology offering. 

Professor of Retail Marketing Sarah Montano has warned that a loss of parternship with M&S would negatively impact UK customers. 

She told MailOnline: 'A move to the US whilst good for the company and their expansion plans would also turn Ocado into a global Superbrand. 

'Any loss of a partnership with M&S would disappoint UK customers and leave a significant gap in the UK online grocery market and who would fill that gap could be interesting.' 

The move to the US could involve deals with other huge brands including retailers Target, H&M and Gap, some experts claim. 

Ocado's food delivery service has been a hit in the UK due to its eight-wheeled robots that move around a giant grid-like structure called the 'Hive', picking up items and robotic arms that will that pack the items for delivery. 

Ocado's food delivery service has been a hit in the UK due to its eight-wheeled robots that move around a giant grid-like structure called the 'Hive', picking up items and robotic arms that will that pack the items for delivery.

One warehouse in south-east London it has more than 2,000 robots working non-stop for 20 hours a day, each picking up to 2 million food items in a shift – far beyond the capability of a human worker.

Brittain Ladd, a strategy consultant said that Ocado should look to branch out of just the grocer business and focus on other major business such as H&M, Target and Gap.

'I have encouraged Ocado for years to open up an office in the US and have a US chief executive,' he told the Telegraph.

He added: 'There is no reason someone like Ocado cannot change their business model where they are more aggressive across retail in general in the US. I would strongly encourage Ocado to list in the US.

'That would certainly help Ocado unlock capital. However, the key is for Ocado to articulate a strategy of how they will use their platform.'

Under the terms of the deal, M&S paid £562million upfront five years ago and the last £190million instalment is due in August this year. But payment of the final portion was dependent on certain targets related to financial performance being met. 

However in 2023 Ocado failed to meet these targets. 

According to accounting rules, M&S could hand over just £28million – some £162million less than the maximum payment.

However, Ocado has argued that the criteria should be revised to account for the pandemic.

Despite this Ocado was named the fastest growing supermarket in Britain yesterday, as price cuts and an expanded range have enticed middle-class shoppers back.

With its sales in the 12 weeks to March 17 were 9.5 per cent higher than the same period last year. 

Putting it ahead of Lidl on 8.8 per cent and Aldi on just 3.1 per cent as well as more traditional grocers including Tesco and Sainsbury's.

Ocado's slice of the market has also edged up slightly to 1.9 per cent from 1.8 per cent a year ago.

Although humans are still involved in the process, the robot army replaces hundreds of human staff who would otherwise be walking around the vast fulfilment centre in search of the items on order. 

According to James Matthews, CEO of Ocado Technology, the single warehouse is the equivalent of 35 supermarkets under one roof.

At capacity, the bots can pick an order in five minutes, which is around five times faster than a trained human worker.

'Between them, they are covering the distance of four and half times the circumference of the earth every day,' Matthews said.

These latest developments came as Ocado unveiled a loss of £403million for the year to December 2023, compared to a loss of £500million in the previous year.

However, revenue in its retail division hit almost £2.4billion, up 7 per cent from £2.2billion a year earlier – while its technology solutions business also surged, by 44 per cent, to £421million.

Alongside its grocery business, the company sells technology to other retailers and in addition has a logistics arm.

H&M, Gap and Target have all been approached for comment.