UK supermarket chain Morrisons signs up for web selling

London: After two years of deliberation, Dalton Philips, chief executive of Wm Morrison, has finally given the go-ahead for online grocery retailing — possibly with Ocado. “The green light is on,” he said.

Morrison is late to the party after having its hands full turning round the company after its troubled £3.5 billion (Dh19.42 billion) takeover of Safeway in 2004, while rivals have been piling online.

Philips has also been sceptical about entering the online grocery market amid concerns that it would be loss-making, and therefore force customers in-store to subsidise online shoppers.

However, he said that it would be possible to create a business that was different from rivals and profitable. “It will be customer-focused. It will be distinctive. It will have fresh food at its heart, and it will be unmistakably Morrison,” he said.

Philips insists he has a plan, but says he is reluctant to elaborate for commercial reasons.

Morrison plans to spend £150 million (Dh832.41 million) developing online this year, and could use its stores as bases for the operation, either in London or the north of England, where it has a greater density of supermarkets. Morrison stores traditionally had large warehouses, which could be converted to space for the online offer.

Alternatively, it could use dedicated distribution centres, or dark stores — effectively stores with no customers from which online orders are fulfilled. Morrison is building a distribution centre in west London, to service its convenience store business, and this could also be used to fulfil online orders.

When it comes to technology, it has access to the platform used by Kiddicare, the online baby goods business it acquired two years ago. It also bought a 10 per cent stake in Fresh Direct, the New York based online grocery business.

But, it also has the option of working with a third party — Ocado. Morrison is looking at using some of Ocado’s technology in its online grocery business. It is also possible it could use some of its warehouse space.

“24 months ago … I said we can’t ignore the online food market, we need to understand it a lot better,” said Philips. “We have spent the last 24 months really investigating the market.”

For Morrison, getting online quickly is essential to reviving its business.

Morrison blames the 2.1 per cent decline in sales from stores open at least a year in the 12 months to February 3 on a lack of convenience and online.

— The Financial Times Limited