Morrisons stalls over online shopping service

Morrisons reported a 2.6% fall in sales over the first quarter, as its online business continues to lag behind its rivals.

by Elizabeth Anderson
Last Updated: 15 Jul 2013
Morrisons, the UK’s fourth largest supermarket chain, has lagged behind its rivals as a lack of online presence and a limited number of convenience stores mean it is losing customers to time-pressured shoppers.

Sales including fuel slipped 2.6% over the three months to May 5. Like-for-like sales excluding petrol fell 1.8% compared to the same time a year ago, although this was an improvement on the 4.1% drop in Q4.

The Bradford-based supermarket chain has struggled to keep up with the likes of Tesco, Asda and Sainsbury’s because of its limited exposure to convenience stores and lack of an online food service.

These are the two fastest growing areas for Britain’s supermarkets, with consumers increasingly choosing to shop locally for their daily essentials and do their weekly shop on the internet. Morrisons is currently the only one of the top four supermarkets not to sell food online.
Two months ago, Morrisons said that it was in talks with online grocer Ocado and that it planned to launch an online shopping service by January 2014. Morrisons confirmed today that discussions with Ocado were ‘continuing’ and a ‘further announcement will be made as appropriate,’ but stopped short of a firm commitment to an online offering this year.

To gain market share in the convenience business, Morrisons plans to open 100 Morrisons M locals by the end of the year. It opened six stores during the quarter, including two locals, and is on track to open 20 convenience stores in the first half of the year.

There is also speculation that Morrisons is losing loyal customers in its northern heartland. John Ibbotson, director of retail consultancy Retail Vision, said: ‘Its modernised stores look good and it is using coupons well in a bid to keep customers loyal. But it is steadily losing customers to Aldi and Lidl in its northern heartland – and this is a major worry.’

Morrisons shares dropped 8.4p to 288p this morning.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today