Morrisons to test online shopping in its heartlands

The Bradford-based group is keen to trial its much-anticipated website on its home turf before venturing further afield.

Morrisons will use its web partner Ocado’s delivery spoke in Birstall to launch the service to Leeds and Bradford.

Its next focus will be on North Yorkshire around Harrogate and York as it taps into the wealthier areas of the county.

Morrisons’ chief executive, Dalton Philips, has spent more than a year planning the group’s online launch, defying critics who said he should have moved faster.

Mr Philips believes the wait will be worth it as Morrisons plans to launch a service that will put its rivals in the shade. Because it produces so much of the food it sells, it believes it has a greater capacity to meet customer requirements as everything is in-house.

“At the moment customers are buying fewer products when online than in store. We are confident we can change that,” said Mr Philips.

“Customers can have their steak cut to a certain thickness or their fish filleted in a particular manner, just as they can when in store.”

As a precursor to the main launch in Yorkshire, Morrisons will start online food deliveries in Warwickshire in January as that is where the picking will be done direct from Ocado’s recently opened Dordon Customer Fulfilment Centre (CFC) in the Midlands.

By the end of 2014 it expects its online offering to reach more than 50 per cent of UK homes including London, which is seen as a key target area where the group is currently under-represented.

Morrisons revealed its plans to the Yorkshire Post yesterday after announcing a 2.4 per cent decline in like-for-like sales in the 13 weeks to November 3.

It said the outcome was in line with its expectations, although it was worse than analysts’ average forecast of a 1.7 per cent fall and the decline of 1.6 per cent seen in the first half.

Mr Philips said the fall followed a slowdown in overall UK grocery market growth, from a 3.2 per cent rise in the second quarter to just 1.8 per cent in the third quarter.

“We’re the first (of the big four grocers) to report over that period. There was a marked step down,” he said.

In addition, the supermarket chain blamed the fall on its lack of online sales and its late entry into the convenience store market.

Mr Philips said he expects underlying sales to grow in the Christmas quarter after two years in which the company’s lack of exposure to online and convenience store markets has led to successive declines.

Analyst Darren Shirley, at Shore Capital, said: “Looking out to the full-year performance, management has stressed that the third- quarter performance was in line with expectations and its financial expectations for the year remain unchanged.

“Such confidence was underpinned by the expectation of a return to positive in-store like-for-like growth through the fourth quarter, an expectation articulated on several occasions through the conference call.

“Such an expectation, we believe, is underpinned by improved trading momentum through October, a further weakening of comparatives and plans to open stores on Boxing Day and New Year’s Day, giving it two additional trading days in a period containing around 90.”

After refusing to trade on Boxing Day and New Year’s Day in order to give staff time with their families, Morrisons has caved into pressure to open its doors.

When asked if the decision to open on the two bank holidays will push its underlying sales into profit, Mr Philips said: “In terms of the sales impact, it’s very hard to put a figure on it.

“We’re the only large retailer that doesn’t open on Boxing Day and New Year’s Day. Our customers expect it.”

He denied that the decision to open on the two bank holidays is the reason behind his confidence that underlying fourth-quarter sales will be positive.

He said the decision to trade on these days means that customers will be able to spread their shopping over more days.

“It’s important to be able to say to customers: ‘If you run out of something, we’re here for you’,” he added.

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