Morrisons’ Amazon tie up bears fruit with new delivery service

 MORRISONS has announced this morning that it would be launching its ‘Morrisons at Amazon’ service after agreeing a deal with the online retail giant earlier this year.

The ‘Morrisons at Amazon’ service means Amazon prime customers can order a full  shop online via the Prime Now app.

Orders can be delivered by Amazon or picked up in store. Morrisons said this new service will will tap into the £50m-£100m incremental profit opportunity it identified in its prelims.

David Potts, chief executive, said: “As food maker and shopkeeper, we have unique skills to help build a broader new Morrisons through capital light growth. ‘Morrisons at Amazon’ is another exciting joint opportunity and makes Morrisons good quality, great value-for-money products available to even more customers.” 

This comes following results from Kantar Worldpanel yesterday which show that Asda and Morrisons are facing pre-Christmas difficulties as market share remains low and sales continue to decline.

With grocery prices having fallen continuously since September 2014, it has been a tricky time for all of the big four supermarkets, with Tesco the only one making a sustained revival.

Morrisons saw a increase in sales for its premium own-label ‘The Best’ line, though total sales fell by 2.4% with a smaller store estate still impacting on its sales.

At the beginning of November, Morrisons reported that quarterly sales were up by 1.6%, 18 months after David Potts took the reins as chief executive.

Renegotiating its deal with Ocado and signing on with Amazon have been seen as gamechangers, but the disposal of M Local convenience stores, which subsequently went into administration earlier this year, have proved to be affecting the company in the short to medium term.

Market share increased by a slither, to 10.5%, whilst rival Asda’s share fell again to 15.5% for the 12 weeks to 6 November 2016, Last month this marked the lowest combined market share in 11 years.

Asda has been hit by technical difficulties this quarter after a glitch saw tills close down for nearly a full Sunday, and it continued to struggle with sales down 5%. But sales in its premium own-label lines were a bright spot this period and this marked a slowing of its decline – sales were down 5.2% last month.

It has been faced with a class action lawsuit brought by 7,000 staff, mainly women on hourly rates, demanding equal pay as those employees working in depots, who are mainly men. It could cost the company £100m.

Tesco has shown a continued revival, growing at its fastest rate in three years, benefitted also by its premium and Farm Brands ranges, as well as an increase in affluent customers through the door, said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.