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Morrison Supermarkets to Make Fresh Food Center of Online

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Nov. 21 (Bloomberg) -- William Morrison Supermarkets Plc, the U.K.’s fourth-biggest food retailer, is to make its fresh-food offering the center of a new online grocery service, including hand-cut meat.

Morrison plans to make its first delivery on Jan. 10 in Warwickshire, in the British Midlands, where the distribution center it shares with Internet-grocer Ocado Group Plc is based. Bradford, England-based Morrison said in May it would pay as much as 170 million pounds ($275 million) to Ocado under the terms of a 25-year online deliveries partnership.

“Fresh food is where we are strongest,” William Morrison Chief Executive Officer Dalton Philips told reporters in London today as he unveiled the company’s web strategy. “We’re late to online, but not too late.”

Morrison hopes online sales and an expansion of convenience stores will help reverse seven straight quarterly declines in same-store sales as its share of the market is eroded by discounters Aldi and Lidl. The grocer has set a target to service half the country online by the end of next year, or 13 million households.

The grocer plans to make its first delivery in London -- the most significant market because of its affluence and relatively high Internet shopping penetration -- in summer 2014, Philips said.

Morrison will use Ocado’s web platform, which allows customers to import their shopping list from competing grocers. A minimum basket order will be 40 pounds, the same as Ocado, Philips said.

“Morrisons won’t break even on 40 pounds, they need at least 60 or 70 pound baskets,” said Andrew Gwynn, an analyst with Exane BNP Paribas, who estimates that the average online-basket size is about 100 pounds.

Customers will be allowed to reject products upon delivery without being charged and will receive a voucher for the same value, Philips said.

To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net

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

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