Morrisons Plot Convenience Catch Up
The UK's fourth largest grocery retailer, Wm Morrsion (Morrisons) , has completed a deal with supply chain services firm Wincant o n to aid the expansion of its ' M local ' convenience format. As the country's leading supermarkets continue to compete for market share gains, the deal reflects increasing industry focus on providing consumers with convenience formats; a trend we expect to gain momentum over our forecast period to 2017.
The new distribution centre is to be located in Manchester, providing a platform f or Morrisons to target the growing demand for convenience in the north of the country as demand for easily accessible retail options beyond the capital continues to gain traction. As consumers continue to demand competitive pricing and locations reached by foot, the concept of 'top up' sho pping is increasingly popular compared with traditional larger, out - of - to wn supermarket shopping habits. Prompting a drive in smaller formats launched by the nation's leading retailers in recent years , for example Tesco 's 'Express' or Sainsbury's Local', Morrisons has been slower by comparison to establish its M Local format . W ith its current 16 stores hugely outrivaled by Sainsbury's 523, lack of presence in this high growth segment has arguably threatened growth in recent years .
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In BMI 's view , the move is a positive development for the retailer that saw group year-on-year (y -o-y) revenue slip 1.8% for Q1 and continues to be threatened by the increasing market share of rival s including Sainsbury's , upscale retailer Waitrose , and discounters Aldi and Lidl . By focusing on convenience, especially nationwide, the retailer is better positioned to capture a slice of the increasingly lucrative sub-segment. Paired with its recent announcement that it will launch online retail ing with online grocery service Ocado (a delayed development that has also been slow and costly) , moves to increase exposure in high - growth operations such as online and convenience , which have proven highly successful for major rivals, argu ably point s to brighter quarters for Morrisons moving forward.