Comment: Morrisons’ convenience deal gives the grocer a reason to smile

Morrisons acquisition of 49 former Blockbuster stores for its convenience business should give the grocer a reason to be cheerful.

Morrisons limped its way through Christmas, the laggard of the big four supermarkets, and one of the reasons given was its lack of an established convenience business. With just 12 at present, the acquisition gives the grocer a big step up in its ambitions. Convenience stores are one of the fastest-growing areas of grocery, alongside online.

Yet Morrisons is way behind the pack. Tesco has more than 2,000 convenience shops, while Sainsbury’s has more than 500. Both are also expanding aggressively in this area and other supermarkets such as the Co-op and Waitrose are fast gaining ground. But Morrisons has to start somewhere, and while we don’t yet know what the grocer paid for the 49 stores, this acquisition will help it gain a foothold in the convenience market.

Convenience is only one of Morrisons’ problems though. Alongside its lack of an online food proposition, many analysts are worried about its core food offer. Some have suggested that boss Dalton Philips is alienating its core customers by taking the brand too upmarket, having introduced ideas such as displaying fresh food on dry ice or selling sushi in Morrisons’ Bradford heartland.

But Philips is sticking to his strategy and believes that it is Morrisons’ lack of convenience and online offers that is holding things back.

While some might still criticise his strategy, the grocer has had another reason to smile in the past week amid the horse meat scandal. While rivals are being hauled over the coals in the wake of the crisis, Morrisons can be grateful for its vertical integration, whereby it owns its own factories and manufacturing facilities. Sales of its fresh meat are understood to have received a boost as customers steer clear of processed meat.

Morrisons will continue to feel the pressure, but Philips will be grateful for any fillip.