Comment: Online entry won’t halt Morrisons decline

Morrisons is hoping to be showered with the riches of online and convenience, but in reality the belated entry into both has inflicted serious damage on the grocer. 2014/15 is set to be a painful year of slowly clawing back shoppers, rather than the breakthrough the grocer so badly needs.

Once again, Morrisons has cited its lack of exposure in online and convenience as one of the reasons sales growth has been so poor. It is making progress, but we are hearing nothing new from the grocer. New convenience stores are open, and online will finally launch in January 2014. These two channels are undoubtedly an area where impressive growth can be achieved – but Morrisons is still woefully behind its rivals.

Sadly it is not the case of build it and they will come – it might have been in 2008, but what reason do online shoppers at Tesco, Sainsbury’s, Asda, Waitrose or Ocado have to switch to Morrisons? Yes, the retailer has a very strong fresh food offer boosted by its vertical integration and this will be a draw for some. But the retailer is seemingly incapable of making itself stand out. Cheeky Geordies Ant & Dec don’t convince me that Morrisons provides great fresh food at a fair price.

Joining forces with Ocado was a clever move, but Morrisons will be hamstrung by a capacity limit at the shared Warwickshire site, and for Morrisons which has seen its share of the grocery market stagnate in recent years, this lack of potential is a real concern. We are predicting only a modest rise in market share for the retailer from its online offer.

Morrisons is taking steps in the right direction, but the speed in which it is doing so is unlikely to allow it to catch up with bigger, better, cheaper and faster competitors.

Andrew Stevens is a retail analyst at Verdict