Two retail giants have announced the creation of a join venture to 'transform online grocery shopping'.

Marks & Spencer is set to acquire 50 per cent of Ocado's UK retail business for up to £750 million as part of the deal.

It will trade as Ocado.com but will stock M&S-branded products, and benefit from access to the retailer's database of 12 million M&S food shoppers.

It spells the end of Ocado's long-running partnership with Waitrose, which had been coming up for renewal this week.

Ocado said ending the relationship would mean it no longer needs to pay sourcing fees to Waitrose, which were more than £15 million in 2018.

Following the termination of the agreement, it is expected that the new venture will be able to launch by September 2020 at the latest.

M&S boss Steve Rowe said: "I have always believed that M&S Food could and should be online.

"Combining the strength of our food offer with leading online and delivery capability is a compelling proposition to drive long-term growth.

"Our investment in a fully aligned joint venture with Ocado accelerates our food strategy as it enables us to take our food online in an immediately profitable, scalable and sustainable way."

Tim Steiner, Ocado's chief executive, said: "We are delighted that our UK retail business will become a joint venture with M&S. This is a transformative moment in the UK retail sector with the combination of two iconic and much-loved retail brands set to provide an unrivalled online grocery offer."

Mr Rowe said the deal would give M&S greater buying power, meaning potentially lower prices for its customers and even the possibility of Ocado-branded products being stocked in stores.

Waitrose responded to Wednesday's announcement by saying it will add an additional fulfilment centre in London as it takes its delivery service in-house.

Rob Collins, MD of Waitrose & Partners, said: "We have strengthened our own online business significantly and said last summer that we will double Waitrose.com within five years. Today's announcement will be a major part of achieving this and in future Waitrose.com and our shops will be the exclusive places in the UK to buy Waitrose & Partners products.

"Waitrose.com sales are growing at 14.2%, well ahead of the market, and customer satisfaction scores for both fulfilment and the website are showing sustained and significant increases too."