Focus on fresh food ‘essential’ to Morrisons’ online offer

Morrisons is hoping that a focus on fresh food will convince shoppers to switch to its online grocery service and analysts believe that, by using Ocado’s expertise, there are grounds for ‘cautious optimism’ in an area that customers have so far shunned.

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The supermarket plans to take its first orders on January 10, starting in Warwickshire before expanding to markets including London, South Yorkshire and the North East by the end of the year. It includes a number of unique elements, including packaging to help prevent damage to delicate items and the chance for customers to assess the standard of products on delivery and receive money-off vouchers if they aren’t up to scratch.

Morrisons has been communicating its fresh food focus for some time, launching marketing campaigns to highlight its “Market Street” proposition. However this has so far failed to translate to increased sales, with like-for-likes down 2.4 per cent in the three months to 3 November, the seventh straight quarter of declines.

Fresh food has so far failed to catch on as quickly as other groceries online as shoppers shy away from buying their fresh food online in favour of doing top-up shops in store where they can inspect the quality of goods. Nevertheless, analysts believe fresh food could be a key differentiator for Morrisons online, particularly given its attempts to appease shopper concerns with the money back guarantee.

Shore Capital’s head of research, Clive Black, says: “Points of difference are few and far between in mass market grocery and so it is eminently sensible for Morrison to extol the virtues of its vertical integration and its Market Street proposition.

“With Ocado’s expertise in fresh food fulfilment, there may be grounds for cautious optimism in delivering ‘freshness’ online.”

Morrisons still faces an uphill struggle to compete with rivals such as Tesco, Sainsbury’s and Waitrose, all of which have offered online groceries for a number of years. Plus it has as yet no plans to introduce a click and collect services at a time when supermarkets such as Asda are expanding that offering by offering collection points at London Underground stations or petrol stations.

The supermarket is also yet to offer a loyalty programme that could provide it with the data needed to send personalised messages tailored to customers and what they buy both in store and online. Morrisons said back in May that it was developing a CRM system, although it was unclear whether this would be a loyalty scheme or would come via the development of its online service.

However, IGD believes that Morrisons is planning a significant investment that will help the supermarket understand customer preferences.

Nick Gladding, senior business analyst at IGD, says: “Morrisons is committed to a major programme of systems investment across the business that includes new CRM software. This will allow Morrisons to understand customer preferences better and develop personalised offers that meet the needs of online as well as in-store customers.”

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