David Prosser: Morrisons takes some cautious steps online

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The Independent Online

Outlook There is concern in some circles about the tentative nature of the push into online groceries unveiled by Dalton Philips, the new chief executive of Morrisons. It's hard to see why: given the difficulty so many other retailers have had making money from online, there is no reason at all for Mr Philips to rush in, even if some analysts have spent the past few weeks predicting this is exactly what he'd do.

For justification for Mr Philips's strategy, look no further than Ocado, the online grocer that everyone likes very much but which has so far failed to make a penny of profit in its decade of trading. The lacklustre support for its flotation earlier this summer was hardly a ringing endorsement of its prospects.

There are good reasons for this. While the online groceries sector will continue to grow, the start-up costs are high. To offer a decent footprint, Morrisons will need to build a distribution network from scratch while simultaneously investing large sums in IT (its systems, by the way, currently don't even run to supporting a loyalty card offer). With an established customer base and a strong marketing push, Morrisons stands a good chance of making a return on its investments more quickly than Ocado, but the experience of the other large supermarkets has been that online ventures do not prosper overnight.

Caution, then, seems sensible. New chief executives often want to make their mark with headline-grabbing new initiatives – the dreaded strategic vision – but Mr Philips has been wise to resist this temptation.

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