Morrisons boss David Potts insists he has “no concerns” over the nature of the grocer’s relationship with online giant Amazon.
Morrisons has launched a supply tie-up with Amazon to provide it with a “wide range” of its fresh, frozen and ambient products to be sold through the etail giant’s Prime Now and Pantry services.
The grocer is bidding to boost its online presence via the deal, but has given Amazon full control over pricing. The move has sparked suggestions the etailer could under-cut the grocer’s store prices and drive shoppers away from Morrisons supermarkets.
Potts, who hailed like-for-like growth of 0.1% during Morrisons fourth quarter as footfall increased 1.6% during the period, dismissed suggestions the deal could cannibalise its bricks-and-mortar sales and undo the work it has done to win back shoppers.
“We feel we are on the brink of an opportunity because we are the small guy in the squeezed middle of the market”
David Potts, Morrisons
Speaking after unveiling a 27% decline in full-year pre-tax profits, Potts said: “Exposure of our brand is a good thing. If you take the example of Greater London, where you might expect a company like Amazon to be quite attractive, we’ve only got 1.6% of the online market and Tesco has got 46%.
“I have no concerns. We’ve gone into this relationship with our tails up over our fourth-quarter trading and we’ve gone into this relationship with our eyes open.
“We feel we are on the brink of an opportunity because we are the small guy in the squeezed middle of the market.
“Amazon is in command of what [price] it sells its goods at. I imagine they want to have a long-term relationship with wholesalers and suppliers they work with.
“Working together with Amazon, which seems to be a progressive company, I think is likely to be advantageous in the long term for the stakeholders of Morrisons.”
The move to manufacture its products for Amazon has also raised questions over the future of Morrisons’ partnership with online grocer Ocado, which currently provides the technology and logistics for the Bradford-based retailer’s ecommerce proposition.
Potts admitted talks were taking place with Ocado over a deal to take space in its new Erith warehouse, but he refused to say whether those negotiations also surround the long-term future of the partnership.
“We are in discussions with Ocado around profitable growth opportunities going forward,” he said.
“We are in consultation to decide together if we can make progress and go forward.”
Morrisons sales growth during the final period of its financial year marked the grocer’s first like-for-like uplift in 16 attempts.
However, Potts warned that the supermarket giant’s turnaround would not be “a straight line”.
He said investments will continue to be made in price and its store refresh programme.
As part of that initiative Morrisons’ new logo, which had been trialled at its store in the Merrion Centre in Leeds, will be gradually rolled out across its estate, while the retailer is also seeking to make better of use of space in store and in its car parks.
Potts hinted that new concession partnerships could be unveiled as part of its interim results briefing in September.
He added: “If you can do your shopping on the landing online at home, or you can wake up and another reason to visit Morrisons might be to get a latte or someone can lift your bonnet and check your wheels, those things, I think, will be attractive.
“We are in negotiations and discussions with a couple of companies.”