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Morrisons outlines its multichannel strategy

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Morrisons today outlined its approach to multichannel shopping, as it confirmed that would launch towards the end of 2012. The ecommerce channel, set to launch in late autumn, will sell general merchandise rather than food in categories that are relevant to Morrisons’ customers.

The supermarket, the only one of the UK’s big four grocers yet to sell online, used the publication of its full-year results today to outline an approach to multichannel that starts with the belief that sales of general merchandise are “migrating online, away from the high street and from ‘big box’ supermarkets.” Morrisons said its internet sales would therefore complement its supermarket sales, selling in categories that were most relevant and attractive to its customers.

That started in 2011 with the purchase of online nursery retailer Kiddicare, which it is now expanding into a multichannel retailer through the addition of 10 flagship stores across the UK, while also raising awareness among its 11.4m weekly Morrisons’ customers of the Kiddicare business. Morrisons will use the Kiddicare operating platform to launch its first online general merchandise categories in the final quarter of 2012.

The supermarket also said it was working to understand how it could launch a successful online food service through its relationship with New York fresh food retailer Fresh Direct, in which it last year bought a minority stake, and would outline its plans for online food towards the end of 2012/2013. It added: “Morrisons does not yet offer an online [food] service, as we do not believe any retailer has achieved the right balance of service to customers and profitable returns for shareholders.” However, it said, since the UK online market was currently approaching £70bn, growing at 16% a year, and the online grocery market was worth £6bn and growing at 19%, there was “a clear opportunity for Morrisons.” The approach is distinct from the other four key UK grocers, Asda, Tesco, Sainsbury’s and Waitrose, who all introduced grocery services first.

“Better technology and busy lifestyles are changing the way customers shop,” said the supermarket in its results announcement. “Different customers in different locations want different products. They shop using different channels, going online, via kiosks and on their smart phones. They also visit different formats, doing their weekly shop in larger stores, topping up in convenience stores and seeking out specific products or expertise in speciality stores.

“To serve more customers, more of the time, we need to be multiformat and multichannel, tailoring our offer to suit the needs of different customers.”

The update came as Morrisons reported a 7% rise in turnover to £17.7bn sales in the year to January 29, compared to the previous year, and an 8% rise in pre-tax profits to £947m. Chief executive Dalton Philips said the supermarket had responded to difficult times and the rise of the ‘professional shopper,’ who takes time to shop around in search of value, with an M savers brand, promotions such as Pay Day Price Crunch, and customer service that was rewarded with growth ahead of the rest of the market.

“We know 2012 will be tough,” he said, “and we will be working hard to deliver even better value for our customers.

“At the same time, we have ambitious plans for the long-term development of the business, through new supermarkets, convenience stores and the development of our multichannel capabilities.”

Other highlights included the opening of 34 new stores in the year, the move into convenience stores with the M Local format and a new South West distribution centre.

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