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Amazon deal revives prospects for Morrisons

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Morrisons has sprinted back into the FTSE 100 following the announcement of its tie in with Amazon.

In December 2015 Morrisons was officially dropped from the FTSE 100. The supermarket chain has experienced a number of difficulties, considering its failure to break into online shopping, as well as the loss of its convenience store chain and the encroachment of discounters into its territory.

Then, at the end of February, Amazon announced that it would start selling fresh food and groceries as part of a tie-in with Morrisons. As Morrisons makes its own food products, it is in the perfect position to expand the range of Amazon Pantry, and since the announcement Morrisons share prices have rocketed.

“Amazon’s partnership with Morrisons represents a monumental turning point for the grocery industry,” said Jens Nielsen, Head of Nordics and UK at Netbooster. “Not only will the ecommerce giant pose a new level of competition for supermarkets, but this technology-driven development demonstrates yet another sector experiencing digital disruption.”

The Big Four supermarket has a pre-existing agreement with Ocado, though the etailer believes that Amazon’s intervention will increase the market for all. With discounters Aldi and Lidl continuing to expand, now into more affluent areas, and with the former now operating its first online-shopping service, it is a crucial point for Morrisons to gain an advantage.

“This latest news should signal a call to action for other grocers to consider their digital strategy,” Nielsen continued. “With traditional grocers facing heavy competition from large discount supermarkets such as Aldi and Lidl, smaller retailers should consider overhauling their digital offering – using their size and flexibility as an advantage when it comes to implementing new technological initiatives. By taking a fresh look at their online sales practices and ways of communicating with customers, grocers and local retailers will be able to drive greater engagement and sales, using digital transformation to remain competitive.” 

Published on Friday 04 March by Philip Gallagher

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