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Morrison Executive Says Sales Hurt by Weak Online, Convenience

Oct. 9 (Bloomberg) -- William Morrison Supermarkets Plc’s sales underperformed the U.K. grocery market in the last three months because of weakness in the growth areas of online food and convenience shops, Commercial Director Richard Hodgson said.

“It’s a structural deficiency that we have as opposed to anything we’re doing wrong in terms of the marketing mix or quality,” Hodgson said in an interview at the Institute of Grocery Distribution conference in London today.

Morrison sales were unchanged in the 12 weeks ended Sept. 30, researcher Kantar Worldpanel said today, the slowest pace of the U.K.’s four main grocers and below the average growth of 3.9 percent. The retailer’s share of the market declined by 0.4 percentage point to 11.4 percent compared with a year earlier.

“Am I happy with it? Clearly not,” the executive said. “It’s sobering when we see the market share when we’ve gone from the top of the tree to towards bottom.”

Hodgson said the fact that Morrison trails Tesco Plc, Wal-Mart Stores Inc.’s Asda and J Sainsbury Plc in two of the market’s fastest-growing areas, is responsible for the slowdown, rather than its product availability, pricing, promotions or focus on fresh food. The retailer has a handful of convenience stores and is considering an Internet offer after buying a stake in New York-based online grocer Fresh Direct.

Sainsbury is opening about two convenience stores a week, and “we’re playing catch-up,” Hodgson said. Morrison opened its first small-format chain this year. A new depot in west London will be able to service more convenience stores within the boundaries of the orbital M25 motorway.

Morrison plans to have 20 small-format “M Local” outlets by the end of the year, including its first in the capital.

Last month, the grocer said it was evaluating opportunities to develop “a unique a profitable online food model in the U.K.,” with a wine offer due to start in the second half.

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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