Morrisons announces plans for online launch

UK supermarket chain Morrisons (LSE:MRW) announced today that it will start selling groceries online by the end of January 2014 in an effort to catch up with its rivals.

Tesco, Sainsbury’s and Asda have been selling over the Internet and delivering to customers for a number of years and the sector is growing fast.

Morrisons, the UK’s fourth largest supermarket group, said that it was in talks with online-only food retailer Ocado (LSE:OCDO) to help launch its web-based business. A deal between the parties could involve making use of Ocado’s technology and operating knowledge but the negotiations do not involve any discussion of Morrisons acquiring all or part of Ocado.

Separately, Ocado confirmed that any agreement with Morrisons would not affect its existing partnership with Waitrose.

Dalton Philips, chief executive of Morrisons, acknowledged that the group is a “late entrant” to the online food market but stressed that the company has learnt from its involvement with UK children’s products web retailer Kiddicare and US-based Fresh Direct.

In addition to expanding into online grocery retail, Morrisons is taking further steps in the convenience stores market. The company said today that it expects to have 100 “M local” outlets open by the end of the year and will be looking to increase that number in the future.

To accelerate the rollout of its convenience store operations, Morrisons recently acquired 62 sites from the administrators of Blockbuster, Jessops and HMV.

The announcement of Morrisons’ plans for online and convenience store retailing were announced alongside its full-year results, which illustrate the company’s need to make changes. Pre-tax profit for the year to 3 February 2013 dropped 7% to £879m, from £947m in 2011/12. Like-for-like sales for the year were down 2.1%.

Weekly customer numbers averaged 11.4 million, which is 0.4 million fewer than in the prior year on a like-for-like basis.

Within its annual report Morrisons noted that the UK’s online food market is currently growing at around 16% as consumers increasingly shop using different channels to manage their spend and time.

UK retailer Tesco Plc (LON:TSCO) said on Wednesday it had taken over restaurant chain operator Giraffe Concepts Ltd for £48.6m


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