Morrisons seeks cost savings with sales-based ordering after reporting £792m loss

Morrisons is targeting cost savings of £1 billion over three years. During 2014/15, it said that it had delivered £224 million of this target. Ongoing development of its IT platform, including the first SBO trials, is part of its cost-saving efforts, Morrisons said.

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Morrisons is hoping to make significant cost savings by introducing sales-based ordering (SBO) systems.

By using more up-to-date sales data from its EPoS systems, SBO is meant to help build a more realistic forecast of future requirements of stock, so that things like stock levels and lead times are optimised.

“Our plans for the introduction of sales-based ordering are well on track. The first category, Frozen, will go live soon, with a phased rollout across the range over coming quarters.

“Both during implementation and once operational, we expect significant cost savings and stock reduction opportunities,” the UK’s fourth biggest supermarket said in its preliminary results today.

Morrisons is targeting cost savings of £1 billion over three years. During 2014/15, it said that it had delivered £224 million of this target. Ongoing development of its IT platform, including the first SBO trials, is part of its cost-saving efforts, Morrisons said.

However, the supermarket chain was unable to avoid a significant increase in loss. For the year to 1 February 2015, it reported a loss before tax of £792 million, up from a loss of £176 million in 2013/14.

Meanwhile, Morrisons said it was “pleased” with its first year as an online grocer. Since launching the online grocery business in January 2014 in partnership with online retailer Ocado, it said that it ended 2014/15 with around £200 million of annualised sales and nearly 50 percent coverage of all UK households, “in line with our ambitious initial targets”.

This year, it plans to focus on increasing its delivery density in its existing coverage area, and will trial “other methods of customer delivery”. If it were to follow the example of other supermarkets, like Sainsbury’s, this could include a click and collect grocery service, where customers can order online and collect their shopping - ready-packed - from a store.

Last month, Morrisons announced it was rolling out contactless payment to all stores by summer 2015. It said that more than £4 million was being spent over three months to upgrade 15,500 payment points in all stores to accept the increasingly popular payment method. 

Image credit: Flickr/ell-r-brown

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