Slow move online leaves Morrisons' profits on the shelf

Profits at the supermarket have dropped 10% thanks to its slow entry to online and convenience stores

by Gabriella Griffith
Last Updated: 07 Nov 2013
Morrisons supermarket has reported a 10% drop in half-year profits, citing ‘challenging’ market conditions. But analysts have put the slump down to the supermarket’s glacial move into the online and convenience markets.
 
Pre-tax profits fell from £440m last year down to £344m for the half year to 4 August. Like-for-like sales dropped 1.6% but turnover remained steady, at £8.9bn.
 
‘While there are early signs that the UK economy has started to turn a corner, the grocery market continues to be a very challenging environment in which to operate,’ said the chain.
 
Morrisons, Britain’s fourth largest supermarket, is hoping its plans to start trading online will put it back in the grocery race. It struck a £216m deal with Ocado back in May and will start offering online shopping from January 2014, but it is way behind its peers such as Tesco, which launched Tesco.com in 2000.
 
The chain is also launching a range of convenience stores to be called M Local, which will hopefully challenge the might of Tesco Metro and Sainsburys Local stores.
 
‘We have also made significant progress in building our presence in the key growth channels of convenience and online,’ said chief executive Dalton Phillips.
 
‘By the end of the year we will have 100 M Local convenience stores, around half of which will be in London and the South East, and we've secured a new distribution centre in Bury to support our convenience stores in the North.
 
‘In parallel we've been working at pace on our online offer; the final pillar of our strategy. Morrisons.com will be making home deliveries of our great fresh food by the end of January 2014, supported through our long term service agreement with Ocado.’
 
The supermarket believes its first foray into the interwebs will increase its accessible market by 40%. It could be right, the online and convenience markets are expected to grow by 16% and 20% per year respectively. It is never too late to give shoppers ‘more reasons to shop at Morrisons’.


 

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