Retailer Morrisons failing to deliver

LONDON BRIEFING: Sales are falling at the grocery group, which has yet to set up a delivery service

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.

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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.

Online service

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.

But it’s going to take more than a couple of cheeky Geordies to revive Morrisons’ flagging fortunes. Figures from research firm Kantar Worldpanel yesterday showed Morrisons was the only one of the big-four supermarket groups to lose sales over Christmas, while Sainsbury’s was the only one to increase its market share. A significant number of Morrisons’ customers defected to the no-frills Aldi chain, whose sales surged by 30 per cent over the festive period, taking its market share to a new peak of 3.2 per cent.

Other discounters – Lidl and Iceland – did well and there were gains, too, at the top end of the market, with John Lewis’s Waitrose pushing sales ahead by more than 5 per cent. Growth at both the discount and the premium ends of the grocery market underlines the “two nations” trend of the widening gap between rich and poor, said Kantar’s Edward Garner.

Morrisons’ 2.5 per cent sales decline is expected to be the low point for the supermarket sector and there should be cheerier news on the cards today from Sainsbury’s.

Boost for Sainsbury’s

Sainsbury’s chief executive Justin King is expected to unveil a Christmas sales increase of about 0.9 per cent, although that may well be topped tomorrow by Tesco, where analysts have pencilled in a rise of 1 per cent.

The news from Tesco will certainly be better than this time last year, when Britain’s leading retailer was forced into a shock profit warning, its first in more than 20 years.

Tesco chief executive Philip Clarke may also have news of a new chief executive of the UK retail operation, a post that has been vacant since March. The frontrunner is Chris Bush, a Tesco veteran and the current chief operating officer of the UK business.

Also reporting tomorrow is Marks Spencer, which is thought to have experienced a 0.5 per cent increase in food sales over the festive period, although its general merchandise division is expected to be down by 1.5 per cent.

This would be the sixth consecutive quarter of falling sales at MS’s core clothing division, a performance that will be judged all the more harshly in light of respectable figures from rivals Debenhams and Next.

* Fiona Walsh writes for the Guardian newspaper in London

Fiona Walsh

Fiona Walsh writes for the Guardian