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How Morrisons is using online and wholesale to expand its business

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Morrisons is building a variety of shopping channels
Morrisons is building a variety of shopping channels
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How Morrisons is using online and wholesale to expand its business

Morrisons today said its online grocery service was now available to more than 75% of British households following expansion to Scotland and within the South of England, and that it was on track to turn over £1bn a year from wholesale.

 

The retailer said that three years into its turnaround strategy to fix, rebuild and grow Morrisons, it was becoming broader and stronger and said “we are increasingly confident of driving multiple growth opportunities” in a competitive market.

 

Like-for-like sales in the second quarter of the year, it said, came in at +6.3%, a nine-year high, thanks to factors including good weather and the football World Cup. Over the half-year to August 5, revenue reached £8.8bn, 4.5% up on the period last year, while pre-tax profits before exceptional items rose 9% to £193m on last time. But after £51m in one-off costs related to bonds and stock estimating, reported pre-tax profits were down by 29% at £142m. Net profits for wholesale, services, interest and online came in at £4m during the half-year.

 

The retailer also said it was heading towards its target of reaching £1bn in annual wholesale revenues: by the end of this year it expects to see wholesale reach £700m through sales to customers including Amazon, McColls, and moving abroad though sales to Big C in Thailand.

 

Chief executive David Potts said: “Strong growth, including our best quarterly like-for-like sales for nearly a decade, together with another special dividend for our shareholders, shows how new Morrisons can keep improving for all stakeholders.

 

“Morrisons continues to become broader, stronger and a more popular and accessible brand and I am confident that our exceptional team of food makers and shopkeepers can keep driving the turnaround at pace.”

 

Here’s what else the supermarket, a Leading retailer in IRUK Top500 research, said about its multichannel strategy.

 

Multichannel mix

More than 75% of British households can now use Morrisons.com after the retailer expanded its online delivery catchment to South Lonodn, Surrey, Kent, Devon and the south coast, while customers in Edinburgh and Glasgow can also now order groceries online. It’s done this using the new Ocado customer fulfilment centre in Erith, North London, as well as using its store-pick model more widely. Together, it said, these routes would “enable us to plan better for more profitable online growth.”

 

It has also launched a new online recipe box. The Eat Fresh box provides fresh ingredients for up to four recipes.

 

Operations and logistics

Morrisons says pick-up services are popular with its customers, who can now collect their online purchases from Amazon lockers across almost the whole estate, and from Doddle click and collect services in 240 stores - of which 80 were added in the first half.

 

The customer

Customer satisfaction scores are improving, says Morrisons, with its overall rating up 4% during the first half, putting it 16 percentage points up since the start of 2015/16.


The grocer has removed 1,500 managerial roles and is adding around 1,700 front-line customer service staff as part of its strategy to simplify in-store structures. That also includes in-store automated ordering, that it says is helping it to improve its forecasting and better manage stock through its supply chain.

 

Own-brand

The retailer said it was moving to integrate its manufacturing and retail operations more fully, producing its own pitta bread and crumpets at its Rathbones bakery and sourcing food such as nuts, bands and fish directly. It now sells its own womenswear range, Nutmeg, in almost 250 stores.


Wholesale

Morrisons said it was well on the way to its target of making £1bn a year from wholesale, with sales expected to reach £700,000 this year. There are now more than 10,000 lines available to Amazon customers to collect for same-day delivery through its Morrisons at Amazon service, which picks from the store. Wholesale grew as the retailer expanded its service to supply McColls with Safeway branded goods to 1,300 stores. It is also supplying Morrisons Daily stores operated by Sandpiper and Rontec, while MPK Garages in the Midlands and Big C in Thailand are new wholesale partners.

 

Brexit

The retailer said there was “some continuing consumer, economic and political uncertainty, particularly as Brexit approaches.”

 

Image: Fotolia

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