U.K.'s Morrisons Plans To Go Big By Going Small

U.K. supermarket chain Morrisons is trying a different tactic to spur growth. Rather than invest more in building new stores, the company plans to stop growing geographically and start outpacing its U.K. competition online and in convenience outlets, Bloomberg reported.

The decision by the U.K.'s fourth-ranked grocery chain to open fewer big supermarkets and bank on online and convenience stores for future growth follows the lead of its biggest competitor, Tesco (NASDAQ:TESO), which said in April that it will scrap plans for 100 major new store projects.

The decision also comes after Morrisons sales rose only 1.8 percent in the last quarter, less than half of the 4.1 percent growth for the grocery market during that same period. The chain's market share also dropped to 11.3 percent in that period, down from 11.5 percent the previous year.

Of course, Morrison's has a good deal of ground to make up. It is the last of the country's major grocers to go online. The plan is to start online ordering in January, aided by web grocer Ocado, and have 100 convenience stores by the end of the year.

CEO Dalton Philips estimated that his company loses two percentage points of sales growth by not having a hand in either the online or convenience store markets, according to Bloomberg. "This sector, not just us, is in a negative position in bricks and mortar because of the headwinds of online and convenience," he said.

For more:

- See this Bloomberg story

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