Morrisons, the UK’s fourth largest supermarket, has agreed a deal with online retailer Ocado that will enable it to provide an online grocery service by early next year.
Morrisons is currently the only UK supermarket that does not provide an online shopping service. The move is regarded by investors as strategically crucial if Morrisons is to capitalise on changing consumer shopping habits.
Morrisons will use Ocado’s technology and distribution network, but will retain its own branding. Commenting on the deal, Morrisons Chief Executive Dalton Philips told BBC Radio 4's Today programme that, "This is a very good transaction for both parties. We're going from a standing start to the fast lane in the blink of an eye”.
The deal between Ocado and Morrisons creates an interesting dynamic, particularly due to the former’s long-standing association with Waitrose. Using YouGov’s brand perception tool, BrandIndex, we have looked into which consumer groups Morrisons, Waitrose and Ocado are currently most popular amongst to see if this offers any insight into what effect this new partnership will have on all three brands going forward.
To begin with, we looked at the broadest possible measure, the UK-wide Index score. This measure indicates that Waitrose’s current Index score is 35, Morrisons’ is 29.5, while Ocado’s is 4.4.
However, if we break the data along demographic lines, interesting regional differences emerge.
For example, amongst consumers living in London, South East and South West regions, Waitrose is way ahead of Morrisons with an Index score of 48.5 compared to Morrisons’ score of 16.6.
However amongst consumers living in the North East, North West and Yorkshire and the Humber, we see that Morrisons is way ahead of Waitrose, with an Index score of 42.7 compared to 21.1.
While Ocado lags behind both supermarket chains across the country, it has a lower Index score amongst consumers in the North (3.3) than in the South (4.5).
This indicates that, as it stands, Ocado’s supermarket partners clearly have regional strengths. While the deal with Ocado is clearly a positive strategic step for Morrisons, it will be interesting to see whether Ocado’s long-standing association with Waitrose has any real impact upon its brand in the Northern parts of the country.
Furthermore, by partnering with a supermarket that has a strong standing in the North, we will be keeping an eye on whether Ocado benefits by increasing its perception and reach amongst consumers in those areas where Morrisons dominates.
By associating with two different supermarkets (one dominant in the South, one in the North), it will be interesting to see whether or not Ocado stands to benefit, and what impact this new strategic partnership will have on the perception of Morrisons and Waitrose in the future, if any at all.
