| LONDON, July 11
LONDON, July 11 Britain's No. 4 grocer Wm
Morrison Supermarkets on Thursday pledged that by 2015
it would have the technology systems, online presence and
convenience stores to have significantly closed the gap on its
The company, which trails Tesco, Wal-Mart's
Asda and J Sainsbury in annual sales, has seen profits
and market share dented by its late entry into the online
grocery and convenience store markets - which are growing in
Britain at about 16 percent and 20 percent a year respectively.
Presenting a strategy update Dalton Philips, chief executive
since March 2010, defended his record.
"I've only been here three years. There was no plan for
online, there was no plan for convenience and we had systems
which were 20th century," he said.
He said three years on, the firm was getting "21st century"
systems, including for accounting, supply chain management and
automated cash-handling, through a 300 million pounds ($448
It was aggressively opening "M local" convenience stores,
with a target of 100 by the end of the year, he said, and had
secured 500 million pounds of online grocery capacity "at a
stroke" through a tie-up with Ocado.
Tesco has more than 1,700 convenience stores, by comparison,
and Sainsbury over 500 and having been selling groceries online
for over a decade.
"We found ourselves five, even 10 years, behind. While we
have made real progress in closing the gap, we are not there
yet, but we will have done so by 2015," Philips said.
DEFENDS OCADO DEAL
Morrisons agreed in May to invest over 200 million pounds in
a 25-year deal with online grocer Ocado that will see the firm
start home deliveries by the end of the year.
Some analysts have said Morrisons is overpaying and have
questioned the length of the contract in a fast-changing market.
And while Ocado's shares have recently hit record highs,
Morrisons have been flat over the last quarter.
"I hear some people say it's too expensive, I really don't
understand this," said Philips.
"Compared to what others have paid to get set up, get right
and run their online services, I can tell you that our costs are
a great deal less."
Philips said that while rivals had taken over a decade to
make online grocery profitable, Morrisons would do it in four
Finance Director Trevor Strain defended the length of the
deal and pointed out that the contract has built-in protections
He said if it was established that what Ocado was providing
was no longer "industry-leading", Morrisons could exit the deal.
"With that context around that protection I think you actually
look at the 25-year agreement in a different way," said Strain.
In May Morrisons, based in Bradford, northern England,
posted a 1.8 percent fall in sales at stores open over a year,
excluding fuel, for its first quarter. It expects like-for-like
sales to remain negative in the 2013-14 year.
Despite recent survey data showing a pick-up in Britain's
economic outlook, Philips said trading conditions in the grocery
market remained tough.
"This market is very, very competitive. I'm under no
illusion that it is suddenly going to get any easier," he said.
Shares in Morrisons were down 0.1 percent at 281.6 pence at
1535 GMT, valuing the business at 6.6 billion pounds.