8:00pm Thursday 14th March 2013
By Chris Holland
Bradford-based Morrisons has revealed it will launch online food sales by the start of next year as it announced ‘disappointing’ results for 2012 in a difficult grocery market hit by pressure on shoppers’ purse strings.
The average customer spend in its stores and numbers of customers remained flat as the UK’s fourth largest supermarket – which is trailing its key rivals in online shopping and convenience stores – signalled a major change in direction with less emphasis on developing large stores.
Morrisons has reduced its ‘core’ store development plans by 40 per cent and will focus on expanding its M-local convenience stores, with 100 outlets planned by the end of this year following a swoop for 62 former HMV, Jessops and Blockbuster sites, mainly in London and the South East.
The emphasis is part of its strategy to catch up with market trends and address its falling market share compared with its rivals and the budget grocery chains and will see Morrisons spend £1.1 billion on convenience stores this year.
Chief executive Dalton Philips said Morrisons’ much-anticipated move into online food retailing would start in January, 2014, and would offer a ‘uniquely Morrisons’ operation based around its reputation for fresh food.
Mr Philips also confirmed that Morrisons is in discussions with online retailer Ocado which may lead to an agreement to licence some of Ocado’s intellectual property and operating knowledge to help Morrisons launch its online grocery business. He denied speculation that Morrisons was thinking of buying Ocado.
Mr Philips revealed that Morrisons like-for-like sales, excluding fuel, were down 2.1 per cent in the year to February 3. Underlying pre-tax profits fell to £879 million from £947million a year earlier, while turnover rose three per cent to £18.1billion from £17.7billion the previous year.
Morrisons has increased its total dividend to 11.8p a share from 10.7p in 2011.
He said: “The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been. We have implemented a range of measures to address this and are making good progress in improving our promotional effectiveness and in communicating our points of difference.
“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. 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. We will continue to implement a wide range of measures to address the sales performance of the business and progress our strategic initiatives, in order to provide a platform for successful long term growth. Our expectations are that the challenging consumer and market environment we saw in 2012 will persist through the coming year.”
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