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Morrisons shares are back at the 200p mark last traded around the UK 100 ’s highs of last April. This comes as the company takes its move on-line to the next level, in a continued effort to fight fierce supermarket pricing competition resulting from the rise of highly successful discounters as well as play catch-up with rivals benefiting from an already well-established web presence.
The driver today is news that MRW has agreed a supply agreement with online giant Amazon, making hundreds of groceries (including fresh food) available via Amazon’s fee-paying Prime Now and the Pantry service it launched in the UK last year but which was limited to non-perishables. MRW has also amended its existing agreement with Ocado (subject to approval) to further growth of Morrison.com, seeing its products housed at Ocado’s London hub in South East London/Kent and providing software to allow orders from Morrison stores to be filled.
This is good news for the UK’s 4th biggest supermarket as it aims to boost volumes, increase the reach of its brand and implement further self-help in an industry still struggling from fundamental change. Having made significant advances already, helped by Ocado (from nothing to an anecdotally solid and ever improving online service) the tie-up with Amazon has potential to narrow even further what is a significant gap with UK incumbent rivals. Not the supermarket group’s shares faring rather better in the since its demotion from the blue chip list in the last quarterly reshuffle.
Mike van Dulken, Head of Research, 29 Feb
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