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Morrisons’ online sales triple as the supermarket diversifies its digital channels in pandemic response

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Image courtesy of Morrisons
Image courtesy of Morrisons
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Morrisons’ online sales triple as the supermarket diversifies its digital channels in pandemic response

Morrisons today reports that its online sales tripled over its latest financial year, as it turned to a variety of digital ways to deliver groceries during Covid-19 lockdowns and restrictions. The supermarket, ranked Leading in RXUK Top500 research, says in full-year results out today that its ecommerce business is already profitable and it aims to make it more so as it develops its online services further.

 

Morrisons sells via a variety of online channels, including via its own morrisons.com website and via Amazon. Morrisons on Amazon is now available in about 50 towns and cities, and the supermarket says that Amazon sales account for more than 10% of sales in most stores that support the service. Morrisons also supplies the new Amazon Fresh grocery store in Ealing - which is located just over the road from one of its own supermarkets. And its products are available for on-demand delivery via Deliveroo from more than 180 Morrisons stores.

 

The update on Morrisons’ multichannel strategy comes as the supermarket reports revenue of £17.6bn in the year to January 31, up by 0.4% from the previous year. Like-for-like sales, which strip out the effects of store openings and closures, rose by 8.6%, excluding fuel. Retail sales grew by 7.8% LFL and wholesale by 0.8%.

 

Pre-tax profits before one-off costs fell by 50.7% to £201m, after the supermarket spent £290m on Covid-19 costs. Had the retailer not spent £230m to repay business rates relief, pre-tax profits would have been 5.6% up at £431m. At the bottom line, after one-off costs of £36m on restructurings, store closures, and the cost of online and home delivery transformation – and a net credit of £10m as the supermarket invested heavily in online transformation but also used its stores more effectively for online and home delivery – pre-tax profits fell by 62.1% to £165m.

 

Morrisons chief executive David Potts says: “I’m pleased with the greater recognition, warmth and affection for the Morrisons brand from all corners of the nation, following a year like no other. We must now look forward with hope towards better times for all, and we’re confident we can take our strong momentum into the new year, targeting profit growth and significant lower net debt during 2021/22.”

 

Multichannel strategy

Looking ahead, the retailer now aims to become more competitive and more efficient as it scales towards more profitable growth. It says it will work to serve customers better, including via ecommerce channels, and it will bring more digital technology into its stores. Currently it is trialling a Scan and Shop app, and using digital shelf-edge labels to automate price changes and feed into the online picking process - much of which takes place in its stores.

 

The retailer delivers to customers via a range of online channels, in partnership with a range of providers. Ecommerce sales via Ocado’s Dordon customer fulfilment centre (CFC) grew over the last year and in February it returned to Ocado’s Erith CFC – it had previously suspended its use of the CFC following a fire in Ocado’s Andover centre but now says it will use up to 30% of delivery slots in time. Ocado technology now enables Morrisons to pick online orders from 197 stores, and its also offers click and collect for almost 450 shops. The retailer is also working with Deliveroo for same-day groceries delivered in as little as 30 minutes, and available from more than 180 Morrisons shops.

 

Morrisons supplies Amazon Fresh, as it delivers groceries same-day to members of the Amazon Prime scheme. The Morrisons on Amazon service expanded rapidly over the last year and orders are now delivered to shoppers living in or near 50 UK towns and cities. In the shops that support Morrisons on Amazon deliveries, more than 10% of sales are made via Amazon. Morrisons goods are also available to buy without queueing from the newly opened Amazon Fresh shop in Ealing, London, the first Amazon grocery store with its ‘just walk out’ technology to open in the UK.

 

Morrisons has developed a range of boxes for online ordering and delivery, from a Christmas dinner box, to those sent to vulnerable or shielding customers, to a school dinner box. A phone ordering doorstep delivery box is also available to elderly, vulnerable and self-isolating customers who do not have access to the internet.

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