Morrisons confirms online grocery move

The supermarket has lagged its ‘big four’ rivals Tesco, Asda and Sainsbury’s in entering the fast growing online grocery market with its failure to do so identified by the supermarket as a drag on sales.

News of the multi-channel move comes as the supermarket says sales in the 12 months to 3 February dropped 2.1 per cent in stores open for a year or more, pulling pre-tax profit down to £879m from £947m a year earlier.

In a statement Morrisons confirmed its intention to move into the online grocery market and said it was in discussions with Ocado as part of the “implementation of the strategy for entering that market” but that the launch of the service is not dependent on the outcome. Talks are focussing on using Ocado’s “intellectual property and operating knowledge”, Morrisons says.

The supermarket has been laying the groundwork for a move into online grocery since acquiring a 10 per cent stake in Fresh Direct, the New York based fresh food delivery network, in 2011. It already has an e-commerce offering in children’s clothing retailer Kiddicare and Morrisons Cellar, an online wine delivery service launched last year.

Chief executive Dalton Philips acknowledged it was a “late entrant” but insisted it had learned from its involvement with Kiddicare and Fresh Direct. He adds he is confident the “points of difference” Morrisons boasts – craft skills and fresh, British food – would translate into the digital space.

Morrisons launched a campaign last month to try and highlight how it differs from the budget supermarkets that have been eroding its market share. The DLKW Lowe created ads, starring TV presenters Ant and Dec, explained how its fish and meat is sourced in the UK and prepared in stores. Activity highlighting the provenance of its fresh food was stepped up in the wake of the horsemeat scandal.

Philips adds: “Recent events have underlined why it’s so important that we tell our customers how and why we’re different and what our vertical integration really means for them. Food quality, provenance and the issue of trust are at the forefront of consumers’ minds and these are all areas where Morrisons has something genuinely different to offer.”