Morrisons signs up to multi-year deal with Amazon
The Bradford-based supermarket chain wants to expand its wholesale offering.
Morrisons has signed up to a new multi-year agreement with online giant Amazon as the supermarket attempts to keep pushing further into the wholesale market.
Chief executive David Potts revealed the deal, which will enable more shoppers to order Morrisons products for same-day delivery on Amazon – expanding on a previous trial.
The company said it had agreed a rolling contract with Amazon and “will be exploring new opportunities to innovate and improve the shopping experience for both Morrisons and Amazon customers”.
Less was said about the supermarket’s relationship with Ocado, which currently fulfils online grocery deliveries for Morrisons, although Mr Potts said the partnership remains in place.
We’ve got an important relationship with Ocado David Potts
He added: “That’s not ending any time soon and we’ve got an important relationship with Ocado.”
The deal with Amazon comes as the supermarket revealed its 14 consecutive quarters of growth have come to an end, with sales in the three months to August 4 falling 1.9% on a like-for-like basis.
Bosses pointed out the fall was due to the strong comparison with last summer, which had better weather and major sporting events.
Total revenues for the six months to August 4 rose 0.4% to £8.83 billion and pre-tax profits were up 48.5% to £202 million, leading to the payout of a second special dividend this year.
But the primary focus for Morrisons is on expanding its wholesale business, with Mr Potts saying he wants to see more of his products in high street convenience stores.
A trial with McColl’s to provide food and drink is progressing well, according to the company, as a new forecourt partner and export partner were unveiled.
On Brexit, Mr Potts said he has not seen the same level of stockpiling that came in the lead-up to the original departure date of March 31 but he echoed the warnings given by others that supply could be hit, especially with the British growing season coming to an end.
He said: “The end of the British growing season for salads and fruits of course makes inbound from mainland Europe more pertinent to what retailers can buy.”
Morrisons produces and buys two-thirds of its products in the UK but in preparation for a potential no-deal Brexit, Mr Potts said suppliers of goods from the EU are being asked to move away from the pinch points of the Dover-Calais route.
“We’re moving away from Calais where we can,” he said.
Mr Potts said Morrisons is preparing for “all eventualities… One is to seek other ports and disembarkation from mainland Europe”.
He added: “Two is to make sure we work quite carefully with our hauliers and suppliers so they’re as prepared in a state of readiness for all eventualities as we would like to think we could become.
“Third, we have looked at where we might want to bring forward some stock levels within the bounds of concepts and fourth, we have applied over a year ago and successfully through a fairly long process achieved authorised economic operator status, which is a position of strength we would then hold with the experts in the export authorities in Calais, France.”
His comments came as the Government published its Yellowhammer memo on the impact of a no-deal Brexit.
It said fresh food supplies are likely to be affected and held up at ports, and also claims that food prices “will go up”.
When asked whether he agreed with the Government’s assessment, Mr Potts would not be drawn, saying “consumers determine the price”.
He added: “We are unable to defy gravity but we’ve prepared for all eventualities… (but) our preparation for all eventualities is only as good as everyone else’s.”
Shares in Morrisons opened up 7.3p at 201.3p, with analysts reacting positively to the news, saying it could be a sign of a slight recovery in the grocery market.
Bruno Monteyne, retail analyst at Bernstein, said: “Doomsday will have to wait another year.
“We think this set-up bodes well for the other grocers in coming weeks.”