Morrisons to use fresh credentials to attack £500m online food target

The grocer is developing its fledgling offer to include the ability to slice steaks and fillet fish to shoppers’ exact requirements.

Morrisons has identified that its shoppers spend £500m shopping online with rivals and will attempt to use its fresh food credentials to wrest shoppers back.

Morrisons chief executive Dalton Philips said: “It’s an offensive and defensive plan. There’s £500m a year of sales that our customers today spend online. They may have two jobs or not have a car so have to shop online.

“We will shore up parts of our heartland and attack white space. We have bought £500m of capacity with our first customer fulfilment centre in Dordon.”

Morrisons inked a £216m deal with Ocado in May to enable it to launch online grocery in January 2014.

Philips defended the retailer’s investment in New York online grocer Fresh Direct in 2011. The venture had been questioned after Morrisons instead opted to use Ocado to launch online rather than develop its own offer through information and software acquired through Fresh Direct and Kiddicare.

He said: “We have learned a tremendous amount from Fresh Direct. We still talk regularly with Fresh Direct, they are doing some really innovative stuff.”

Philips said Fresh Direct has developed communications, customer ratings, sourcing and social media operations that Morrisons will draw on for its own launch.

The cost of embedding a team from Morrisons in Fresh Direct for a year was within the £27m of “aborted online costs” the grocer has written off.

Morrisons today reported a 10% fall in underlying first-half profits while like-for-likes fell 1.6%.

Philips said he expects investments in price, the expansion of its convenience store estate and continuing improvements in own-brand to translate into an improvement in like-for-likes in the second half.

New finance chief Trevor Strain has also kicked off a review of its £9bn property portfolio as the retailer looks to raise funds from its estate. The review is due to conclude in March.