Supermarket Morrisons has confirmed today that it is in discussions with online grocer Ocado to use its technology as it announced the launch of an online grocery channel amid falling profit.
Profit-before-tax dropped 7.1 per cent in the year ended February 3rd 2013 while like-for-like sales fell 2.1 per cent and total sales rose three per cent to £18.1 billion.
The grocer’s delay in entering the fiercely competitive grocery market has been blamed as the cause of its falling sales for some time and it is now set to launch a website in 2014 following the successful launch of online wine range Morrisons Cellar.
Negotiations do not involve any discussion of Morrisons acquiring Ocado either in whole or in part and the online grocer emphasised its continued relationship with Waitrose, which will be unaffected by the deal.
Commenting on the long-awaited move, Morrisons CEO Dalton Philips said: “Today’s announcement that we are launching an online food offer in 2014 is another important step in Morrisons strategy of being ‘Different and Better than Ever’.
“We may be a late entrant to the online food market but we have learnt from our involvement with Kiddicare and Fresh Direct.
“We have long been a leader in fresh food and our craft skills and vertical integration really set us apart from the competition.
“Ensuring that these points of difference translate into our online food offer will be a priority.”
Morrisons is working hard to broaden its reach across all channels, with 17 new stores opened over the year and last month the grocer announced the acquisition of six HMV stores in order to strengthen its convenience offer.
Expanding its convenience offer is core to the retailer’s strategy with more than 60 new sites acquired in recent weeks, causing the chain to increase its store openings target by 40 per cent with 100 stores expected to be trading by year’s end.
It is hoped that its entry into the digital arena will boost overall sales following disappointing LFLs as a result of what Philips called “sustained pressure on consumer spending”.
“Recent events have underlined why it’s so important that we tell our customers how and why we’re different and what our vertical integration really means for them,” Dalton added.
“Food quality, provenance and the issue of trust are at the forefront of consumers’ minds and these are all areas where Morrisons has something genuinely different to offer.”