Morrisons Plans London Assault For Its Online Service

Morrions is planning a major push for its grocery delivery business into the North of England and then south into London by the end of the year.

The Bradford-based supermarket will will launch the service in Warwickshire in January from its Dordon distribution centre near Tamworth, built by business partner Ocado. The supermarket said this morning it will 'shortly thereafter' extend its online delivery service from the Midlands to Yorkshire and then to London by the end of next year.

Morrisons said it expects to cover 50 per cent of UK homes with the service by the end of next year.

The supermarket plans to use a 'spoke' satellite hub owned by Ocado in Birstall, Leeds and is understood to be already recruiting staff for the foray.

The venture is also likely to clash with Asda whose head office is in Leeds and who has a distribution centre in nearby Morley serving its Yorkshire customers.

The Birstall warehouse is one of several 'spokes' run by Ocado - separate to its main distribution centre in Hatfield - that include Manchester, Bristol, Oxford, Weybridge and Southampton. Dordon is a fully automated centre built in the image of Ocado's main centre in Hatfield.

Ocado will operate the Dordon and Leeds centres and employ all the staff while the deliveries will be made in Morrisons branded vans. Ocado, which delivers a mixture of its own and Waitrose products, operates a different model to other supermarkets which rely on picking goods in store by hand or on semi-automated but still heavily manual 'dark' stores specially built for online delivery.

'The current thinking is that Morrisons' plan is going to take some of its competitors by surprise and may show the cracks in some of the other operations run by its close rivals,' said one source.

Ocado's 'spoke' facilities are docking stations transferring ready-bagged goods in crates from articulated refrigeration lorries and then into Sprinter delivery vans for the last part of their journey.

A limited trial of the Morrisons service is expected to launch as soon as this month. Chief executive Dalton Philips estimates the grocer loses £500 million of sales annually by not having an online delivery business.

Morrisons also said this morning that like-for-like sales in the third quarter to the end of November declined by 2.4 per cent.

'Consumer confidence remains subdued and we continue to see heavy promotional activity across the industry. As previously indicated, our low exposure to the sector’s key growth areas of convenience and online continues to impact the sales performance of the group,' the retailer said.

However, recent data from market research firm Kantar has indicated an improvement in Morrisons' performance over recent weeks.