Morrisons is to set up a bespoke 100,000 sq ft distribution centre at Feltham to support the development of convenience stores in London.
The retailer started trials of the M-local convenience format at sites in Ilkley, Wilmslow, and Manchester last year. The stores are supplied by nearby core stores on a hub and spoke model.
Morrisons said performance had been well ahead of expectations and it expects to trial another 15 stores this year prior to accelerating the roll-out programme in 2013-4.
Stores outside London will continue to be supported by the hub and spoke distribution system established in the trials.
Morrisons has been slower than some of its rivals to move into the convenience market, which is growing a twice the rate of the rest of the UK retail market. It puts this down to the fact that customers are seeking to spend less per shopping trip and cut down on their fuel costs.
* Morrisons is on track to deliver annual benefits of £100m annually by 2013-4 through efficiency initiatives, the company said in its half year results.
Much of the work has been on a new supply chain management systems. It said: “Evolve, our six year systems-transformation programme, is progressing well and is on track to be completed on schedule in 2013/14. During the period we concluded the implementation of our EPOS till system, introducing it into our petrol filling stations as well as our stores.
“We completed preparations for our new supply chain management system, which converges our accounting, supplier ordering and distribution systems onto a single platform. This is a significant step towards us delivering improved inventory control across the business. The rollout will continue through the remainder of the year.”
It is also working on its multi-channel offer. Morrisons took the first steps towards establishing itself in this area through its acquisition, in 2011, of Kiddicare, the baby and infant merchandising retailer.
It is using Kiddicare’s technology platform to provide the foundation for its online offer. In the second half of this year it plans to launch Morrisons Cellar, a range of wines, with fulfilment from the distribution centre in Peterborough.
Morrisons has reported a one per cent rise in underlying first half profit to £445m on sales up 2.3 per cent to £8.9bn.