Blog: Morrisons to face questions over ambition

Dean Best | 7 September 2011

This week, Morrisons chief executive Dalton Philips will be in the spotlight when he announces the retailer's half-year results. The UK's fourth-largest grocer has been growing sales ahead of the market, although, like its rivals, its growth is lagging the inflation seen in the sector.

However, Philips will face questions about his plans to move the business further into convenience and online. A year ago, Philips said Morrisons would look to open convenience stores on a trial basis and would consider developing an online service. Since then, Morrisons has opened its first M-local store (and plans to open two more) and acquired a 10% stake in US online retailer FreshDirect, a move to help it set up its first online service, to be launched in London.

Oriel Securities analyst Jonathan Pritchard says the retailer had "exceeded" his expectations on like-for-like sales. However, he is less complimentary about Morrisons' diversification. "Customers want more than plain vanilla superstore food retailing these days - non-food, convenience, internet etc and, whilst the self-help open to the company is worthwhile and deliverable, we fear that the LFL form will wane eventually."

Philips is a man unwilling to be rushed into hasty expansion; last March, when Morrisons announced the FreshDirect deal, he was asked about the retailer's online ambitions. The decision to launch a service in London pushed back Morrisons' plans to enter the online space but Philips was quick to point to his rivals' records online. However, some industry watchers still want him to go further - and faster.