Morrisons commits £3bn to fund growth

Morrisons plans to invest £3bn in its stores, own label ranges and the development of online platforms over the next three years.

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The supermarket, which is the only “big four” grocer without an online platform, has committed to launching a Morrisons branded non-food online platform by 2012 and an online fresh food business by 2013 if it is sure it will be profitable.

To this end, it announced a £32m investmentv for a 10% stake in US fresh food retailer FreshDirect earlier today (10 March). The move follows the acquisition of online baby wear retailer Kiddicare.com for £70m last month.

Morrisons says it will use the knowledge and experience that these established firms offer to build its online business.

The supermarket insists, however, that its online business will be different to the services offered by the competition.

Speaking at a press conference in London, financial director Richard Pennycook says that Morrisons must learn how to translate its in-store skills, fresh food focus and reputation for customer service online.

Pennycook adds: “We don’t think anyone in the UK has cracked fresh food online yet. The secret of being profitable [in online grocery] is customer retention. Many struggle because they can bring in new customers but they are loosing them at the other end.”

Morrisons is also looking to press ahead with the development of a convenience store network under the name M Local. It is also currently reviewing its own label ranges, appointing Belinda Youngs as own brand director to lead a three-year transformation to grow its own label brand and sales in January.

The supermarket says total sales for the year ended 30 January increased 7% to £16.5bn. Like for like sales rose 0.9%.

Pre-tax profit for the year increased 1.9% to £874m.

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