Morrisons to sell food online, plans Ocado partnership

14/03/2013

Morrisons has announced plans to sell online for the first time, as Britain's fourth biggest supermarket chain saw its profits fall in 2012.

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The announcement follows reports that Morrisons is in talks with Ocado over plans to share the online retailer's warehouse capacity and technological expertise.

Under the terms of the deal being discussed, Morrisons would pay to use part of Ocado's new distribution centre in Dordon, north Warwickshire, and would harness Ocado's acknowledged digital technology expertise to build its customer-facing website.

Morrisons said the outcome of the discussions would have no bearing on the launch of its web food offer by January 2014.

In a statement Morrisons confirmed its intention to move into the online grocery market and said it was in discussions with Ocado as part of the “implementation of the strategy for entering that market” but that the launch of the service is not dependent on the outcome. Talks are focussing on using Ocado’s “intellectual property and operating knowledge”.

Morrsons has so far refused to give more details on plans for the online food service.

Unlike the other grocers that make up Britain's so called "big four" - market leader Tesco, Wal-Mart's Asda and Sainsbury’s - only Morrisons currently does not have a website for the home delivery of food.

Morrisons confirmed its first fall in profits for six years but also plans to launch online in 2014 as it attempts to catch up with rivals.

The supermarket chain's chief executive Dalton Philips had pledged to drive a turnaround after sales plunged over the crucial Christmas trading period.

The dip contributed to a 7% fall in pre-tax profits to £879m - with like-for-like sales down 2.1% in the year to February 3.

Morrison’s like-for-like sales fell by 2.5% over the festive season - compared to a 1.8% increase for Tesco, which had itself previously been struggling.

Philips admitted Morrisons had not done enough to communicate its promotions and suffered because it still lacked a meaningful presence in the two fastest growing sectors of the market - online and convenience.

It has also lagged behind in the roll-out of convenience stores. However, since Christmas Morrisons has bought dozens of sites from collapsed chains HMV, Blockbuster and Jessops which it plans to bring under a 'Morrisons M Local' brand.

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