Morrisons online and convenience stores - the great catch up

The supermarket business is a fascinating one. People have short memories but I can remember walking into supermarkets that just sold food. In a relatively short space of time UK supermarkets have grown significantly in size, products and profits. You can now buy everything from pharmaceuticals to clothing to homewares to technology and music. In food itself they have created own range labels, chilled food and whole new ways of buying alcohol. In a relatively short space of time they have changed our high streets.

Continuing this growth, which delivers the profits that keep shareholders happy, is difficult and needs constant innovation. Supermarkets moved to online retailing as a new route to grow. Then, having taken things away from the high street, the supermarkets are now taking them over as well. Our papers are often filled with news of campaigns to stop another supermarket store opening, especially the new high street based convenience style stores such as Tesco Express Sainsbury’s Local. So while three of the top four supermarkets have driven ahead with online services and convenience outlets, one has been conspicuous in its absence; Morrisons. 

Morrisons is not having a great time at the moment. It has recently posted a 7.2% fall in pre-tax profits to £879m for the year to 3rd February. This is its first fall in full-year profits for six years and like-for-like sales were down more than 2%. As part of this announcement its Chief executive Dalton Philips announced that it is pushing ahead with rolling out its new convenience stores and, more importantly, it will finally launch an online offering.

With both of these areas they are playing catch up. They have already opened 12 “M” branded convenience stores, have bought 62 other sites from the administrators of HMV, Blockbuster and Jessops and want 100 opened by the end of this year. As a comparison Sainsbury’s has over 500 of its ‘Local’ convenience stores already.

However it is online where they really have been caught out. Online food shopping is growing at about 20% per year and Tesco, Asda and Sainsbury’s attribute it as a source of strong growth for them. While the announcement from Morrisons is not surprising there is a question of what took them so long. It now hopes to have an operation in place by January 2014 and announced that it has been talking to online food operation Ocado about sharing technology and knowledge to help it achieve that.

Learning from others’ mistakes is fine but playing catch up in a market that is moving so quickly is extremely difficult. Morrisons does not have a loyalty card like the Tesco Clubcard which uses data from that to populate its online offering with what a customer normally buys in store. In this game they have proved that big data matters. Where they might have an edge is in m-commerce with Ocado reporting that 28% of its orders are from mobile devices.

Morrisons is a long way from its first store opened in Bradford in 1961 by Sir Ken Morrison and one of the PG Tips chimps who cut the tape. Whether these new initiatives are the right thing to do is not in question; whether they have left it too late is another though. Hopefully partnering with experience, especially with someone with experience in the biggest growth area of mobile will give them the kick start they need to catch up.

Tim Youngman is head of digital marketing for Archant @timyoungman