In-house sourcing and processing remains crucial to Morrisons

VERTICAL integration remains crucial to Morrisons leadership in fresh food the company says in its preliminary results for the year to February 3.

Chief executive Dalton Philips said the supermarket’s  below-market sales performance was “disappointing” - turnover up 3 per cent but like-for-like sales down 2.1 per cent and  underlying profit before tax down 4 per cent to £901m – but announced the Bradford based business would for the first time enter the on-line food shopping operation next year. This he said was the fastest growing market channel in the UK and represented an exciting opportunity for the business.

“Today’s announcement that we are launching an online food offer in 2014 is another important step in Morrisons strategy of being  Different and Better than Ever.”

But Mr Philips also said sourcing and processing fresh food through Morrisons’ own facilities had long been a key point of difference for the business.  

“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,” he said.

But he went on to state that “recent events” had underlined why it was so important customers were told how and why Morrisons was different and what its vertical integration really means for them.

“Food quality, provenance and the issue of trust are at the forefront of consumers’ minds.”

“In addition to the flexibility that controlling our own supply chain brings to the business, it is a true source of competitive advantage which enables us to offer great quality products for great prices. It also enables us to have control over the provenance, safety and quality of our fresh products.

“It is becoming increasingly important to consumers that they are able to understand and trust where their food comes from. With half of the fresh products we sell in store being processed through our own factories Morrisons is uniquely placed to offer customers the reassurance they seek.”

Mr Philips also referred to his company’s expansion in fresh meat packing following the acquisition of a facility from Vion Group in the first half of the year.

 “This will enable us to extend the range of categories we produce through Farmers Boy. We have also started to expand our Colne abattoir to facilitate further pork processing,” he said.

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