Home delivery fleet boom

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Changing shopping habits are prompting retailers to invest millions of pounds into home delivery networks that rely on expert fleet teams to ensure goods reach consumers.

These operations will work alongside traditional supermarkets and a shift to ‘click and collect’ services, where online purchases are picked up at local hubs.

Two of the biggest recent announcements have come from Morrisons and Asda, which represent opposite ends of the delivery development spectrum.

Morrisons announced last month that it plans to move into selling online this year, 13 years after industry pioneer Tesco first brought online ordering and home delivery to the supermarket masses.

Experts believe Morrisons’s tardiness is caused by two reasons. Firstly its acquisition and integration of Safeway in 2004 and secondly because it has doubted the profitability of online retailing.

However, customers are demanding an online offering and rivals are benefiting from providing home delivery. For example, Waitrose reported a 49% rise in internet sales last year through its link with internet grocer Ocado.

Morrisons currently runs a fleet of approximately 120 commercial vehicles, but this would have to massively increase if it was to provide an online offering.

By comparison, Tesco has more than 3,000 vans and Asda in excess of 1,300, according to Fleet200 research by Sewells and Fleet News.

Morrisons has confirmed that one potential solution is to work with Ocado to piggyback on its expertise and create a “distinctive” and “unmistakable” online food business.

Plans are at an early stage, although there is relatively little time to establish a working delivery operation ready for a planned January 2014 launch.

Morrisons refused to reveal details of its plans. It confirmed the talks with Ocado only when reports were leaked to
the markets.

A spokesman for Ocado said: “Ocado confirms that it is in discussions with Wm Morrison Supermarkets which may lead to an agreement to license certain of Ocado’s existing and future intellectual property and operating knowledge for the purposes of Morrison commencing an online grocery business in the UK.

“Any such agreement would be complementary to Ocado’s existing partnership with Waitrose, which would be unaffected by any potential agreement with Morrison.

“Discussions are ongoing and there can be no certainty that an agreement will be reached.”

It is interesting to note that despite Ocado’s online-only expertise and more than a decade of trading, analysis say it has yet to make a profit.

At the other end of the spectrum, Asda has revealed plans to steal a march on supermarket rivals with a new same-day delivery service as part of a £700 million UK investment drive.

Asda, which has already seen online sales grow at 20% a year to make it the second-biggest online grocer behind Tesco, intends to trial the same-day service from May, with customers able to collect their order from stores.

The investment also includes opening 12 stores this year.

Asda will be the first of the UK’s major supermarket retailers to offer such a service and the development highlights the growing importance of online retailing to the
food industry.

Several supermarkets have announced they are shifting away from plans for large out-of-town shopping centres to focus on digital business and smaller convenience stores.

Asda, which is owned by Walmart and employs 175,000 in the UK, is planning the investment after 2012 saw sales grow 4.5% to £22.8 billion. Morrisons saw 3% growth in turnover to £18.1bn.


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