Morrisons launches one hour delivery service

Morrisons is looking to online to boost sales at a time when shoppers are less keen on the weekly trolley dash

The move will allow Amazon Prime customers to order a full Morrisons shop online via the Amazon Prime app, with the choice of paying £6.99 for a one-hour delivery or taking a two-hour delivery slot for free.

While the service will only be available in certain areas of London and Hertfordshire, Bradford-based Morrisons said it could help boost profits by between £50m and £100m.

David Potts, Morrisons’ chief executive, said it is a low-cost move that will deliver more customers.

“As food maker and shopkeeper, we have unique skills to help build a broader new Morrisons through capital light growth,” he said.

“‘Morrisons at Amazon’ is another exciting joint opportunity and makes Morrisons’ good quality, great value for money products available to even more customers.”

Amazon announced a deal with Morrisons in February to sell hundreds of its products through its food delivery service Amazon Pantry and its subscriber service Amazon Prime Now.

The US retail giant later revealed a fresh food delivery service - AmazonFresh - in June, giving customers the chance to order their full weekly grocery shop including fresh fruit and vegetables, meat, seafood and dairy products.

Neil Wilson, markets analyst at ETX Capital, said the move was “pure profit” for Morrisons and another “feather in the cap” for its chief executive.

“This is a big money-spinner for Morrisons and gives it a massive edge over Tesco and Sainsbury’s in the home delivery market. With prices being slashed and competition fierce, this is the kind of deal that will make a big difference to the bottom line.

“Morrisons stock has surged this year as a result of the efforts to strip out negative like-for-like sales and lowering costs. Morrisons has just delivered four straight quarters of sales growth - this form looks set to continue.”

Prices at supermarket checkouts have continued to fall as Britain’s Big Four grocers are locked in a price war following the rise of German discounters Aldi and Lidl.

Closely-watched figures from Kantar Worldpanel revealed on Tuesday that total sales at Morrisons had slipped 2.4 per cent in the quarter to November 6, but this was largely due to store closures. Britain’s biggest supermarket Tesco saw sales grow at their fastest rate for three years, jumping 2.2 per cent.

Some analysts believe Morrisons is better positioned than rivals Tesco, Sainsbury’s and Asda in the post-Brexit vote environment because it has a stronger balance sheet, sells fewer non-food products and makes half of the own brand and fresh food it sells, making it less exposed to currency pressures.

Others caution Morrisons could be vulnerable to a fight back by sector laggard Asda.

All of the big four supermarkets - Tesco, Asda, Sainsbury’s and Morrisons - have been cutting prices in a bid to better compete with German discounters Aldi and Lidl, which have eroded their market share.

Earlier this month Morrisons said it was “very confident” about Christmas trading as it reported a fourth consecutive quarter of underlying sales growth as its new management team steers the group back to health.

The Bradford-based grocer is to launch 100 new Christmas products under its recently launched The Best brand as it attempts to lure back customers who have previously traded up and gone to other supermarkets over the festive period.