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Morrisons makes a deal with Ocado Friday, 17th May 2013
Photo credit: Morrisons
Morrisons seals a 25-year deal with Ocado for its online service to sell its groceries via online. As it has been hit by lack of online presence in recent years, the fourth largest supermarket in the UK has reported that its website will have a 'Morrisons’ look and feel' and will retain its branding as sets to use Ocado’s distribution centre to deliver groceries.
The company’s initial payment to Ocado will be £170 million in order to obtain Dordon, Ocado's distribution centre at central England, including associated equipment. The company agrees to pay Ocado 25 per cent of the earnings made via its website which will be reduced to 10 per cent after 15 years.
To accommodate Morrisons' range, the company said it will invest further £46 million for expansion of Dordon and also to combine with its systems and find a network of delivery spokes.
For the cost of development Morrisons will invest £25 million more in the year. The firm expects that the online business will have positive earnings by 2016-2017.
Chief executive, Dalton Philips said "I'm confident that Morrisons.com will grow over time to be an operation of real scale and significance whilst creating meaningful long-term value for Morrisons shareholders."
Asda report first quartely profits Thursday, 16th May 2013
Photo credit: Asda
The supermarket chain, which is owned by American retail giants Wal-Mart, said on Thursday that excluding fuel and VAT, sales at shops open over a year have seen a 1.3 per cent rise in the 14 weeks to April 12.
The rise follows a 0.1 per cent rise in the fourth quarter from the previous financial year.
Asda say that their online sales have grew by 16 per cent, proving beyond doubt how essential the grocery e-commerce market is becoming.
Furthermore, Asda have been investing in its 50 pence and one pound lines, and lowering the prices of essentials such as break, milk and eggs.
Asda chief executive Andy Clarke was buoyant with the supermarket’s performance, saying: “This represents a strong performance in what remains a very tough market.
"Despite a difficult environment for our customers, we have continued to achieve growth on growth by lowering the prices of essentials and investing in technology to make shopping more convenient."
Asda’s good performance has not been matched by some its competitors however, with Tesco posting a 51.5 per cent decline in year profit last month, whilst Britain’s fourth top grocer Morrisons, reported a 1.8 per cent fall in like-for-like sales in the first quarter.
Despite this, Sainbury’s, which currently occupies the third spot in the grocery sector, reported a 6.2 per cent rise in annual profit last Wednesday.
Parent company Wal-Mart, currently the world’s largest retailer, posted a higher quarterly profit on Thursday, whilst underlying sales fell 1.4 per cent.
Ocado's shares fall 8 per cent amid potential contract dispute with Waitrose Monday, 13th May 2013
Photo credit: My-Retail Media
Ocado, the grocery delivery service, saw its shares drop 8 per cent amid a potential breach of contract with main clients Waitrose, The Guardian reported Monday.
Waitrose lawyers remain concerned about Ocado’s proposed deal to set Morrisons up with their own online delivery service, fearing a conflict of interests.
The news follows reports of a protest vote within Ocado’s annual shareholders’ meeting on Friday over board pay packagaes, which include a 30 per cent salary rise for chief executive Tim Steiner.
Ocado’s shares did see a distinct rise with the Morrisons deal imminent, however, shares are currently down 18.2p at 206.4p. Shore Capital analyst Clive Black recommends selling, saying:
“We believe that Ocado is playing with fire in speaking to another British supermarket group, as it tries to utilise its substantially greater fulfilment capacity, because the group's umbilical cord to Waitrose may be cut sooner than we anticipated and Ocado cannot exist as a commercial entity without Waitrose in our view. “
He continued to say: “Whilst Ocado states that any agreement with Morrison's would not be a conflict with Waitrose, we see the mood of [Waitrose chief executive Mark Price] as being deadly serious. As such, Ocado may have irreparably polluted a commercial relationship upon which it is dependent and it must lead to a greater chance of a break in 2017 in our view. Additionally, Waitrose's understandably forthright stance means that the prospect of Morrison and Waitrose brands simultaneously utilising Ocado's fulfilment centres and vans is low. As such, the extent of a tie-up between Morrison and Ocado needs to be pencilled down, along with it the financial extent.”
This could potentially spell danger for Morrisons, who have been falling behind competitors Tesco and Sainsbury’s.
Online grocery shopping is one of the fastest growing areas in the sector, and chief executive Dalton Phillips has vowed that a service will be available by January 2014.
Morrisons shares fall as sales continue to struggle Thursday, 9th May 2013
Photo credit: My-Retail Media
The UK’s fourth biggest grocer, Morrisons, crashed in the stock market today as it continues to fall behind its competitors.
The 1.8 per cent slump was an improvement from its 4.1 per cent performance in the last quarter, however, shares fell 8.2p to 288.2p, making them the worst performers in the FTSE 100 index.
Despite this, the supermarket chain claimed that it was experiencing improving performances in London due to avoiding the horsegate scandal, and the acquisition of TV duo Ant & Dec for their advertising campaigns.
The grocer remains in negotiations with Ocado over utilising their technology and operating practices for online sales, but vowed to launch its own online service if the negotiations fell through. The supermarket said that an online service will be available before the end of January.
Online grocery shopping is one of the fastest growing areas in the sector, and Morrisons are falling behind rivals Tesco and Sainsbury’s by not having this service.
Morrisons’ chief executive Dalton Phillips remains under pressure about the grocer’s declining profits, but despite this, Phillips says that the companies’ exclusion from the horse meat scandal has helped boost the sale of beef products.
Morrisons rumoured to be considering £1bn Ocado offer Wednesday, 24th April 2013
Photo credit: Morrisons plc
Rumours emerge that Morrisons could be considering a full-scale offer for online retailer Ocado, in a deal that could be worth £1 billion.
Morrisons has come under pressure in recent months as rival supermarkets continue to expand their online presence. Industry data on Tuesday from Kantar Worldpanel found Morrisons to have achieved a 0.3 per cent rise in sales in the 12 weeks to mid-April, in contrast with Sainsbury’s 5.4 per cent rise and Asda with 3.0 per cent.
News that Morrisons could engage Ocado in a licensing deal would be mutually beneficial for each retailer, who have both struggled to gain a sure footing in the rapidly expanding online grocery market. In March, when Ocado was first linked to Morrisons, it briefly traded above its 180p floatation price, although shares have since dipped as investors wait to hear for any further updates on the deal.
Reports in the press this week could provide new hope on developments, after the Daily Mail said rumours from Morrison’s headquarters suggested the retailer may decide to skip a licensing deal with Ocado and instead launch a full-scale offer in the region of £1 billion for the online-only grocer.
Morrisons cuts nearly 700 jobs Wednesday, 10th April 2013
Photo credit: Morrisons
The introduction of new cash-counting machines will see Morrisons cut the jobs of 689 back office staff.
As the UK’s fourth largest supermarket looks to reduce costs in its operations, the retailer is said to be replacing its cash office managers and supervisors with cash-counting machines that will be installed in stores.
According to the Guardian, Morrisons has said the introduction of the machines is part of an “ongoing programme to ensure that Morrisons continues to improve its competitiveness.”
The move comes six months after 165 jobs at Morrisons’ Bradford headquarters were cut after the company outsourced its financial transaction processing service to an Indian firm. The Guardian notes that a four-week consultation has started for the most recent staff to be laid off, however it’s thought they are unlikely to be redeployed to other jobs.
Sainsbury's market share increases 6.2 per cent, while Tesco's falls Tuesday, 26th March 2013
Kantar World Panel has published its latest grocery market share report. The report covers the 12 weeks leading to 17th March 2013 and reveals that Sainsbury’s achieved a significant increase in its share of the market, while rivals Tesco and Morrisons saw theirs decrease.
Sainsbury’s was undisputedly the retailer with the greatest increase among the “big four” of Tesco, Asda, Morrisons and Sainsbury’s. Fraser McKevitt, a retail analyst for Kantar Worldpanel, stated “Sainsbury’s year-on-year growth of 6.2 per cent firmly beats the total market growth of 3.9 per cent. Since 2004, its annual share has been on a rising trend and now stands at 16.8 per cent for the 52 weeks ending 17th March”.
“Elsewhere in the big four”, McKevitt continues, “Asda holds on to the record share of 17.9 per cent it achieved a year ago but there are share drops for Tesco and Morrisons”. Outside of the big four, Aldi and Waitrose reported impressive increases in market share of 30.8 per cent and 12.5 per cent respectively.
McKevitt explained the changes in market share among the companies, stating that “Austerity and provenance are the key factors behind the varying retailer performances this month. Continued pressure on household budgets has helped Aldi, Lidl and Iceland to record market beating growths while Waitrose and Sainsbury’s have managed to mostly avoid adverse media coverage from the horsemeat scandal”.
Tesco, M&S and Boots top UK retail brand line-up Wednesday, 20th March 2013
Photo credit: Tesco Plc
Despite concerns the UK’s biggest retailer could be losing its competitive edge, Tesco remains the nation’s top retail brand, after losing 2 per cent in value last year to £7.2 billion.
Its market share may have dropped below 30 per cent for the first time in eight years, but Tesco remains comfortably ahead of Marks & Spencer, who experienced a 5 per cent boost in brand value in the past year to £4.3 billion.
As part of its report into the UK’s most prominent retailers, US consultancy firm Interbrand found Boots to be the biggest riser in the top 10, up 16 per cent to £2.2 billion, while Asos became the tenth most valuable UK brand, worth £275 million, and the first online-only entry into the top 10. Argos saw the largest loss in the top 10, falling 8 per cent to £533 million, to sit between Sainsbury’s, at £700 million and Morrisons at £300 million.
Outside of the top 10, B&Q, John Lewis, the Body Shop and Primark all ranked for the first time as 15 of the most valuable brands.
“In response to increased competition and the grim economic climate, retailers are re-assessing store portfolios and continuing to focus on multichannel strategies. Investment in improving the overall shopping experience across platforms has been evident with many stores upgrading online and offline channels.” Graham Hales and Caitlin Collins at Interbrand commented in light of the results.
“Online shopping has been a growth driver in 2012 with ASOS notably being the first online-only retailer to break into the U.K. top ten. This is no surprise for savvy U.K. shoppers, who make up the highest proportion of online sales in the world, estimated to be around 13 percent in 2012.”
Morrisons plans to sell food online before the end of 2013 Thursday, 14th March 2013
Photo Credit: Morrisons
Supermarket chain Morrisons has announced its intention to begin online retail and delivery of food before the end of 2013.
Morrisons is currently the fourth most powerful supermarket chain in the UK. All three of the supermarkets currently ranked above it (Sainsbury’s, Asda and the current leader Tesco) sell and deliver food through their respective websites. Morrisons has now stated that it is in discussions with the online grocery retailer Ocado about the possibility of a partnership.
The supermarket’s overall annual profits up to February 3rd decreased by £34 million from its total in 2011-12, while its market share fell from 12.4 per cent to 11.8 per cent.
Meanwhile, Britain’s supermarket chains are finding that ecommerce and convenience stores are increasing in popularity with every passing year, their market share currently rising by 20 per cent and 6 per cent respectively. Morrisons has opened several convenience stores and has already begun to sell items through online retail, although until now food has not been among the products delivered.
The supermarket’s chief executive, Dalton Philips, stated that “The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been. We have implemented a range of measures to address this. Today's announcement that we are launching an online food offer in 2014 is another important step”.
Heat is on for Morrisons as “sustained pressure” sees profits fall Thursday, 14th March 2013
Morrisons M Local store, Ealing. Photo credit: Morrisons
“Sustained pressure from consumer spending” led to a drop in annual pretax profits for Morrisons, its first fall in full-year profits for six years.
The retailer, which is Britain’s fourth biggest supermarket, on Thursday reported a 4 per cent fall in underlying profit to £901 million for the year to 3 February. Although the results were in line with analysts’ consensus forecasts, they were down from the £935 million achieved the year before.
Like-for-like sales excluding fuel and VAT fell 2.1 per cent for the year, after rising 1.8 per cent for 2011-2012.
"The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been," chief executive Dalton Philips said in light of the results, adding:
"We have implemented a range of measures to address this. Today's announcement that we are launching an online food offer in 2014 is another important step."
As one of the Big Four supermarkets in the UK, Morrisons faces fierce competition from Tesco, Sainsbury’s and Asda, who regularly battle it out over so-called price wars and promotions to gain the market edge. Philips on Thursday re-iterated a number of measures the retailer would be undertaking to keep up, including expanding its investment to convenience stores, launching an online food offer and making customers aware of its unique selling points as a retailer.
"These disappointing results from Morrisons won't have surprised the city," Phil Dorrell, director of retail consultants, Retail Remedy, said on Thursday:
"What's perhaps hardest to understand is why it will now be 2014 before Morrisons has an online food operation?
"After two years of development, the current online offer remains poor, with only wine as a home purchase. In an online world, Morrisons isn't online, and that says it all."