Big four UK supermarket chain Morrisons has announced it will finally launch an online shopping portal in a bid to catch up with its larger rivals after suffering its first profit drop in six years.
Unlike market leader Tesco, Asda and Sainsbury’s, the company, which opened its first supermarket on the site of a former cinema in Bradford in 1961, has to date resisted the online revolution for home delivery of food.
But revealing a pre-tax profit of £879 million for the year to February 3, down £68m (7%) from the previous year, Morrisons’ results reflected the need for a change.
The supermarket chain’s chief executive Dalton Philips pledged to drive a turnaround by focusing on strategic objectives of efficiency and growth after sales plunged over the crucial Christmas trading period.
Mr Philips said “sustained pressure on consumer spending” was reflected in Morrisons’ like-for-like sales performance, which declined 2.1% throughout the year, excluding fuel sales.
Although turnover increased 3% to £18.1 billion, he said the group had not done enough to communicate its promotions, and figures suffered because it still lacked a meaningful presence in the two fastest-growing sectors of the market online and convenience.
According to market researcher Kantar Worldpanel, Morrisons has been losing market share due in part to its lack of presence in both these sectors, but also due to a surge in the growth of discount grocers such as Lidl and Aldi.
In a bid to reverse the decline, Morrisons has revealed it is in talks with the online grocer Ocado in the hope of forging some sort of partnership deal.
Mr Philips said the launch of an online food offer, which would come into fruition next year, is “another important step” for the supermarket chain.
The group has also stepped up its investment in convenience stores.
It said its first 12 M local stores were performing well, and it has acquired 62 sites from the administrators of Jessops, HMV and Blockbuster.
Philips has said Morrisons needs to do a better job of telling customers how its products and service beat those of other supermarkets.
“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,” he said.
“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.”
Reflecting on the year, chairman Sir Ian Gibson said: “It has been a period of significant strategic progress as we continue to lay the foundations for future growth.”
The group opened 17 new supermarkets last year and launched 5,000 own-brand products allowing ‘M savers’ to become its fastest growing own-label value brand with sales up 37%.
Moving forwards, Mr Philips said the group was increasing its target for store openings by 40%.
He said Morrisons now plans to have 100 stores trading by the end of the year.
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