Morrisons makes an IT step change

Group's IT investment plan is designed to close the gap with larger rivals

Last week's announcement that Wm Morrison, the UK's fourth largest supermarket chain, plans to invest £110m in new IT systems over three years has put supermarkets' IT back into the spotlight.

The investment is part of a larger programme that Morrisons' new chief executive Marc Bolland hopes will increase the retailer's rate of expansion, after three years spent integrating the Safeway supermarkets business that it acquired in 2004.

Morrisons is launching a four-pronged £450m investment programme to enable it to compete with its three larger rivals: Tesco, Asda and J Sainsbury. The investment in IT systems is only exceeded by the £180m the company is spending on store refurbishments.

However, analysts have questioned whether the IT investment will give Morrisons a competitive advantage over the three leading supermarkets.

Alex Kwiatkowski, lead analyst at Datamonitor, said, "Wanting to have systems as good as Tesco's is very logical, but very difficult to achieve. It will have a big problem competing with the gorilla in the market that is Tesco."

A Morrisons spokesman said, "We are doing, and always have done, what is right for Morrisons. You cannot compare us with Tesco because Tesco is a different business on a different scale."

Morrisons has won awards for the in-store availability of its products, which it attributes largely to the effectiveness of its IT systems for stock replenishment.

Simon Thomas, IT director at wine merchant, Thresher Group, said, "Given the combination of Morrisons' merger with Safeway and the relatively low investment in IT that Morrisons has made for a long time, the supermarket group is clearly playing catch-up."

According to Morrisons' annual results statement, the £110m IT investment will be spent "moving our trading, store, warehousing, distribution, payroll and financial systems on to new platforms, wherever possible using best-of-breed packaged software".

The decision means Morrisons is making a step change in its IT strategy, where other retailers have been investing continuously in IT systems.

Tesco has been refining its core merchandising applications since they were installed in 2003. And the retailer has continued investing in two applications from JDA Software while simultaneously rolling them out in several different countries.

Thresher Group, which competes with the supermarkets on alcoholic drinks, has also made continuous investments to its merchandising applications since they were implemented in 2003 and 2004.

Thomas said, "There is not an endless list of things where you can make a step change in your investment and suddenly get large benefits. However, there are constant opportunities for refining IT and most of us are going at it in roughly the same way.

"My personal preference has always been for a continuous investment model and that is our strategy with our outsourcing partners."

Morrisons recently bought a JDA merchandising application that Tesco has used since 2003.

Other recent IT investments by Morrisons include a range-planning system from software supplier Galleria that enables it to tailor the products in its stores to different parts of the country and different types of customers.

Morrisons invests in new IT systems


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