Morrisons Switches Focus to Small Stores, Online Service

The U.K. supermarket will scale back expansion of big stores and concentrate on convenience stores.

September 13, 2013

LONDON – The supermarket race for more space is a thing of the past, according to Morrisons, The Guardian reports. The United Kingdom’s fourth-largest supermarket will turn its attention from big stores to online shopping and convenience store growth. “The future is no longer in building big supermarkets. The space race is well and truly over,” said Dalton Philips, CEO of Morrisons.

Morrisons announced over the summer that it would increase its convenience store outlets to 300 within two years. The supermarket chain will launch an online delivery service, with partner Ocado, soon. Morrisons is counting on online markets and convenience stores to advance its potential market size by 40%.

“The group has yet to execute. Both profits and same store sales have fallen, with the group's slow adoption of both convenience stores and an online proposition allowing rivals to gain market share, which will be tough to regain,” noted Keith Bowman, analyst at Hargreaves Lansdown.

The company is “working to ensure we are fit for the future,” said Phillips, adding that Morrisons is upgrading IT systems. Phillips also pointed out that the company would review its property holdings.

“Whilst early indications of a recovery in the U.K. economy are encouraging, we are yet to see this impact on consumers' pockets. We have therefore developed our financial and operational plans on the basis that there will be no significant change to the challenging economic environment in the near future,” said Phillips. “We anticipate an improvement in our sales performance during the second half and accordingly the board believes the group's performance for the full year will be broadly in line with its previous expectations.”

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