Morrisons decline continues, but supermarket insists online is getting there

Profile picture for user slauchlan By Stuart Lauchlan May 8, 2014
Summary:
Morrisons nightmare goes on this week as the firm reports a 4.2% fall in sales to 4th May and its share price collapses to its lowest level in 8 years, but an online milestone is about to be passed.

morrisons
Back in March we highlighted the impact that years of neglect of online and lack of multi-channel thinking has had on UK supermarket chain Morrisons.

The nightmare goes on this week as the firm reported a 4.2% fall in sales to 4th May and saw its share price collapse to its lowest level in 8 years.

Against that, the mockery over beaming bread adverts onto works of art fades into the distance...

See also: Supermarket giant Morrisons plight is a lesson on neglecting multi-channel retail
Mar 14 2014diginomica.com

For all that, CEO Dalton Philips insists that the company is finally getting its digital act together. In its financial statement on Thursday, the firm stated:

We continue to make good progress in all our strategic initiatives. The investment we have been making in our IT infrastructure and systems is on track, providing us with the platform we need to drive cost out of our business and deliver planned savings of £1 billion over the next three years.

Morrisons.com is performing ahead of our expectations with industry leading metrics on the key points of on time deliveries and replacement items.

By the year end our online business will reach up to 50% of UK households and, together with convenience, is expected to account for over £500 million of annualised sales.

Monday milestone

Next Monday will be a big day. Following trials in Warwickshire and Yorkshire, Morrisons will make its first online deliveries in London, serving 400,000 households through its partnership with online grocer Ocado.

See also: Morrisons - the retail nightmare goes on as data breach undermines confidence
Mar 16 2014diginomica.com

The supermarket also still plans to provide a click and collect grocery service in the second half of the year.

But elsewhere there’s revision to previous plans such as announcing the closure of its standalone wine site, Morrisons Cellar, which was launched in 2012 before the Morrisons.com site itself.

From 24 June, the online wine shop will be incorporated into the main grocery site in a move that Steve Mosey, category director for beers, wines and spirits at Morrisons, describes as a logical step:

“As we look to continually improve our online wine proposition, we have taken the decision to combine Morrisonscellar.com with our industry leading grocery site Morrisons.com which launched earlier this year.

“This move will take effect from June 2014 and is the logical next step to provide our customers with a one-stop shop for all of their online wine and groceries.

“Our online wine range will continue to provide great quality at key price points thanks to the tremendous strides taken by our new wine sourcing team. The Taste Test, which helps guide customers in an approachable way towards wines to suit their personal preferences, will remain core to our online wine offer.”

A more dramatic impact will come from the already-announced disposal of Kiddicare, the baby products site purchased for £70 million in 2011 to form the bedrock of Morrisons online push. But the firm decided to sell off the business which will result in a charge of £163 million.

Blasted from the past

It’s been a bad week all round with the current management team coming under fire from a Morrisons veteran who worked alongside founder Sir Ken Morrison.

morrisons ocado
Morrisons and Ocado - online for London

Roger Owen, a property director with the supermarket for 22 years until 2009, claimed current chairman Sir Ian Gibson should stand down and that chief executive Dalton Philips is out of his depth.

He went on to claim that Morrisons is:

“a super tanker heading towards an iceberg”.

In what’s probably a sign of how sensitive to criticism Morrisons management now is, a spokesman passed the buck back to Owen, noting that the lack of an online strategy has been a long term failing that was not addressed across the years:

“He might be better served taking more of a thoughtful view of his role as a director of a board that left Morrisons, uniquely amongst the big grocers, with no online and no convenience offer.

“Judging modern retailing through the lens of the past is never very enlightening. These are unhelpful and unwelcome comments reflecting a different era in retailing.”

See also: Morrison's digital boss exits after supermarket chain bets the farm on, er, digital
Apr 9 2014diginomica.com

Meanwhile the former head of digital development at Morrisons - and former chief operating officer at Kiddicare - who jumped ship in April is to join some of his former colleagues at a start-up funded by digital incubator Haatch.

Haatch was founded by Scott Weavers-Wright, his wife Elaine and former Kiddicare and Morrisons digital executive Fred Soneya in October 2013.

Harrow told Retail Week:

“It’s a pleasure to be back working with the team that made Kiddicare such a success and I’m looking forward to the new challenge that Haatch offers me in addition to announcing a new start up in the coming months.”

 Verdict

It's just not getting any better, is it?