Retailer Morrisons failing to deliver
LONDON BRIEFING:Sales are falling at the grocery group, which has yet to set up a delivery service
When a chief executive talks about going for “last-mover advantage”, he has either got a cunning plan or is clutching at straws. At Morrisons, Britain’s fourth-largest grocery group, it looks alarmingly like the latter.
The Bradford-based chain has emerged as one of the biggest turkeys this Christmas, with an underlying sales decline over the festive period of 2.5 per cent. That’s worse than analysts had expected just a few weeks ago, although the company used a downbeat note by its house broker, Jefferies, last week to soften up the City for the poor results.
One of the key problems for Morrisons is its total lack of a home-delivery service. It’s got a website, with a nifty little shopping list that allows you to calculate the savings on your shopping basket. But – and this seems extraordinary in 2013 – you then have to print out the list and go and do the shopping yourself at one of its stores.
Not surprisingly, Morrisons’ customers deserted the chain in droves at Christmas, either taking their custom to rivals that offer home delivery or to discounters such as Lidl or Aldi, which don’t deliver but do offer rock-bottom prices.
Presenting the disappointing results to the City this week, Morrisons chief executive Dalton Philips acknowledged the group had been held back by its lack of an online offering but insisted there was still time to enter the fastest-growing part of the retail sector. “We’re not too late to the party . . . in some cases there are last-mover advantages,” he said.
Philips gave no firm date for the launch of an online shopping service, simply saying he would give an update when Morrisons reports its full-year figures in March.
A certain amount of caution is not a bad thing in a chief executive, but Morrisons has been studying the home-delivery market for years, particularly since it took a stake in FreshDirect, the New York online grocer, almost two years ago. Philips needs to get on with it.
More urgency is required, too, in expanding Morrisons’ presence in the convenience store sector, which has proved particularly lucrative for rival grocery groups. There has been some action on the marketing front, another area that needs urgent attention, with news last week of a multimillion-pound partnership with Ant and Dec. The popular duo will front an advertising campaign for Morrisons, and the retailer will also sponsor their Saturday-night shows for ITV.