Morrisons is in talks with Ocado to license some intellectual property and operating knowledge to help it start its online grocery business.
Dalton Philips, chief executive of Morrisons, described the decision to launch an online food offer in 2014 as another important step in Morrisons’ strategy of being ‘Different and Better than Ever’.
“We may be a late entrant to the online food market but we have learnt from our involvement with Kiddicare and Fresh Direct. We have long been a leader in fresh food and our craft skills and vertical integration really set us apart from the competition. Ensuring that these points of difference translate into our online food offer will be a priority.”
In a statement on the Ocado deal, Morrisons confirmed that the matters under discussion with Ocado “may form part of the implementation of the strategy for entering that market. Morrisons decision to enter the online grocery market is not dependent on the outcome of these discussions. There is no certainty that an agreement will be reached”.
Ocado emphasised that the negotiations did not involve any discussion of Morrison acquiring either the whole of, or an equity stake in, Ocado. “Any such agreement would be complementary to Ocado’s existing partnership with Waitrose, which would be unaffected by any potential agreement with Morrison.”
Morrisons has been focusing on filling another gap in its portfolio with the development of a network of convenience stores and has increased its target from 60 M local stores this year to 100.
It has chosen Wincanton to run a 100,000 sq ft distribution centre on the North Feltham Trading Estate to serve the M local store network.
In the coming year it will be looking to acquire a new CDC in the north of England to support the planned growth of convenience formats in that region. Outside of the major conurbations it will supplement this expanding CDC network with our unique ‘hub and spoke’ distribution system.
Morrisons took the first steps in establishing itself in online retail through its acquisition, in 2011, of Kiddicare, the online baby and infant merchandising retailer. We have expanded Kiddicare as a true multi-channel retailer.
It reckons that online, with a total market value of £31bn and forecast growth of 13.6 per cent in 2013 is the fastest growing channel in the UK. General merchandise is migrating online, away from the high street and from ‘big box’ supermarkets. There is a significant trend towards the growth of the multi-channel retailer and this is an exciting opportunity for Morrisons.
Tough trading conditions last year meant that Morrisons saw underlying profit before tax fall 4 per cent to £901m despite a 3 per cent increase in sales £18.1bn.