The systems integration between Safeway and Morrisons could result in the largest consulting deal signed in the UK retail industry so far, outstripping the £1.5bn contract signed by Sainsbury’s and Accenture in 2000, industry experts have predicted.
Last week’s departure of Safeway chief information officer Ric Francis from the newly merged supermarket chain signalled the start of a complex IT integration programme between the two companies.
Francis’ departure reflects the “low-tech” approach of Morrisons, which has turned its back on IT initiatives, such as loyalty cards, e-commerce and advanced supply chain systems, said Tom Friedman, chief executive of consultancy Retail Systems Alert.
In contrast, Safeway has been at the leading edge of IT development among UK retailers, trialling innovative technology such as RFID and electronic shelf-edge labelling and being the first in the UK to implement chip and Pin fully.
“Morrisons has good supply chain expertise but it has not got much IT knowledge,” Friedman said. “This project could result in a significant consulting engagement – the biggest ever in retail - because of this lack of expertise. Safeway has advanced systems, but a significant amount of expertise has left because the deal has taken so long to go through.”
Morrisons, which has brought in restructuring experts from accountants Deloitte & Touche, expects to spend around £1.6bn integrating the two businesses with a completion target of 2007.
The company also plans to cut up to 1,200 head-office jobs in a bid to cut annual costs by £75m, but further plans will not be revealed until the 90-day staff consultation period is over.