Morrisons has confirmed that it is in talks with online retailer Ocado to help launch its 'first' online home delivery service.

FPJ understands that the service will be go live in early 2014.

The move follows the Bradford-based retailer's announcement of its first drop in profits for six years.

The Morrisons group made an underlying pre-tax profit of £901 million in the year ending 3 February, down from the £935m it made in the 2011-12 year.

In recent months, the Bradford based retailer has lost market share to UK retail rivals Tesco and Sainsbury's, with both, unlike Morrisons, boasting fully integrated convenience and online channels.

The online groceries market is currently growing at 20 per cent year while the convenience market is growing at 6 per cent, according to Kantar Worldpanel.

'The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been,' said Morrisons' chief executive, Dalton Philips.

He added: 'We have implemented a range of measures to address this. Today's announcement that we are launching an online food offer in 2014 is another important step.'

The 'talks' with Ocado have already had a positive impact on the online retailer as its shares rose by over 30 per cent this morning.

In Ocado's latest trading update, for the 12 weeks ending February 24, sales rose by 14.4 per cent compared to the same period in 2012, while the average number of orders a week rose by 12 per cent.

'We maintained the momentum in sales growth and new customer acquisition with which we entered the year,' said CEO Tim Steiner.

'Further improvements to the proposition to customers that we are making this year should enhance our appeal to shoppers and enable us to continue this momentumt.'

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