Morrisons today unveiled its latest annual results, with profits up a healthy 13% and like-for-likes increasing by an altogether more modest 0.9%.
More eye-catching than the underwhelming sales performance was the news that Morrisons is sensationally taking on both the US and the whole internet in one fell swoop.
Okay, it’s actually less dramatic than that. Morrisons has bought a 10% share in New York-based online grocer FreshDirect, and will use the partnership to develop its own online expertise. Chief executive Dalton Philips gets a seat on the FreshDirect board and Morrisons will embed a team at the company’s Long Island base to pick up a few tips.
While the momentum is building, coming hot on the heels of the Kiddicare deal, that doesn’t mean an online launch is imminent. In fact, Morrisons said it would be another two years before the service goes live, beginning in London.
Philips today paid tribute to the profitability of FreshDirect, which he contrasted with the online operations of Morrisons’ UK rivals.
“I have seen retailers all over the world [and] few have inspired me as much as the team at FreshDirect, a highly successful and profitable food retailer with a track record of terrific customer service,” he said.
Returning to a familiar theme, he added: “We don’t believe anybody is making money online today in the UK. We are going to do it through affordable fresh foods.”
US observers have contrasted FreshDirect with Webvan, an early mover in online grocery that went from ‘dotcom darling’ to bankruptcy in the space of a couple of years.
As far as Philips is concerned, they’re preaching to the choir. He’s betting that Morrisons’ last-mover advantage pays off in the long run.
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