Blog: Morrisons takes baby steps into online channel
Petah Marian | 15 February 2011
UK retailer Morrisons has taken a baby step into the online channel today (15 February) with the acquisition of baby product retailer Kiddicare.
CEO Dalton Philips emphasised the move would give it access to Kiddicare's "extremely well-built and scalable platform" which is "at the forefront of technology" in the sector.
This platform will be the basis for the development of Morrisons' online non-food offer, which it plans to begin offering at the start of next year.
Philips also touted the experience of Kiddicare executives Scott and Elaine Weavers-Wright, who will join the retailer following the acquisition.
"They are two of the most talented and respected operators of online retail today and their experience and track record with Kiddicare.com has been outstanding," Philips said. "Their knowledge and expertise will be invaluable as Morrisons builds its online business."
CFO Richard Pennycook said the move would mean that it avoids many of the stumbling blocks that come with setting up an online platform. "I've spoken to many other executives that have gone online and growing online platforms can be a painful journey," he said.
Phillips has repeatedly emphasised that the retailer would not consider any move online unless it would be profitable. Kiddicare, which recorded around GBP3m (US$4.8m) of EBITDA in 2010, satisfies that key metric.
However, Philips remained coy on what the retailer's plans would be for its online grocery offer, only to say that its food and non-food offers are "quite distinct" at the moment, and that the retailer is working to understand the platform, but that "food is a very different proposition".
He did add that more of its plans for online grocery would be revealed at Morrisons' trading update in March.
However, it seems somewhat likely that the retailer's online offer may take the form of a click-and-collect service. When asked about whether the retailer might use its larger-than-average storage facilities in its stores to offer groceries, Philips said that there is "an opportunity for click-and-collect" as part of its previously announced plans to "liberate space" in stores.
The industry remains eager to see the retailer take its grocery offer online, today's move shows that it certainly remains willing to enter the channel, but only if it can do it profitably.
Until 10 March, the industry waits in anticipation to see what plans Philips has for the retailer.
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