MORRISONS, the only one of the UK’s “big four” supermarket chains not to sell food over the internet, is to launch an online venture with kitchenwares retailer Lakeland.
Under the deal, Lakeland’s products will be sold through Morrisons’ existing web presence, which encompasses baby products and wine.
The lack of an online food offering has been blamed for the grocer’s lacklustre performance over the festive season, with like-for-like sales sliding 2.5 per cent in the six weeks to 30 December. That compared with growth of 1.8 per cent at Tesco and 0.9 per cent at Sainsbury’s.
The group said the partnership with Lakeland was part of its strategy of “expanding its non-food business online to allow its supermarkets to remain focused on fresh food”.
Morrisons’ chief executive, Dalton Philips, who is expected to unveil details about breaking into the online food sector when the grocer publishes its full-year results in March, said he believed the future for non-food retailing lies online rather than in-store, and the group had decided to team up with Lakeland “because it has spent 50 years selling reliable kitchenware for cooks of all standards”.
The online food market is growing at about 20 per cent a year, but Philips has insisted that the Bradford-based group is “not too late to the party”.
As part of the tie-up, Lakeland will initially fulfil orders for its kitchenware – which will sit alongside Morrisons’ existing range of “everyday essentials” – before eventually handing over responsibility to the supermarket. Family-owned Lakeland, founded in 1964, launched its own website in the late 1990s.
Sam Rayner, managing director of the Cumbria-based retailer, said: “This is a unique opportunity for us to work closely with one of the UK’s leading grocers and we see a lot of opportunity in the links between our respective products and services.”
Asda, Sainsbury’s and Tesco have had an online presence since the 1990s, but Morrisons is a relatively late starter and only made its first move into web-based retailing in 2011, when it acquired baby products firm Kiddicare.com for £70m. It launched a wine website, MorrisonsCellar, in November.
Morrisons has been rumoured to be eyeing a bid for online groceries firm Ocado to kick-start its move into the food arena, but analysts at Panmure Gordon believe such a deal is unlikely, given Ocado’s £520 million market capitalisation.
Despite the festive sales decline, the grocer believes its full-year performance will be broadly in line with analysts’ forecasts, which point to an underlying pre-tax profit of about £913m, down from £935m the previous year.
Lakeland’s marketing director, Tony Preedy, said there were no plans to sell the firm’s products through Morrisons’ chain of more than 480 stores.
Preedy added that the company’s own website, which will be retained, was trading “very successfully”. He said Lakeland plans to expand into the German online market later this year “and we expect further European growth to follow thereafter”.