Morrisons buys stake in online player in US to build e-commerce capability

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Morrisons: acquiring stake in FreshDirect

Morrisons has acquired a 10% stake in leading online US grocer FreshDirect for £32m to help develop an e-commerce business in fresh foods in the UK.

Announcing sales up 7% to £16.5bn and a 13% increase in pre-tax profits to £869m for the year ending 30 January 2011, Morrisons said it had also secured sites for a convenience store trial.

Launched in 2002, FreshDirect is a fast growing online food retailer with a strong focus on quality fresh foods, customer service and competitive pricing.

It currently serves over 600,000 customers in New York and parts of New Jersey, Connecticut, Westchester County and Nassau County, and is known for its fresh-from-the-farm foods and brand-name groceries at everyday low prices, all delivered to the customer’s door.

FreshDirect’s customers can tailor their requirements for deli, butchery, fish and bakery product and over 600 entrees and side dishes, made fresh daily by professional chefs using the finest, freshest ingredients.

Under the terms of the agreement, Morrisons CEO Dalton Philips will join the board of FreshDirect and Morrisons will embed a team in FreshDirect’s Long Island City, NY facility to learn about its e-commerce model.

FreshDirect will receive a minority economic interest in Morrisons’ planned London online operation.

According to Morrisons, the two companies have complementary businesses that emphasise fresh food, provenance and high levels of service.

FreshDirect’s expertise delivers a customer friendly, online experience backed by strong IT infrastructure. Learning from FreshDirect will help Morrisons as it launches its e-commerce offering in the UK.

Dalton Philips, chief executive of Morrisons, said: “I have seen retailers all over the world. Few have inspired me as much as the team at FreshDirect, a highly successful and profitable food retailer with a track record of terrific customer service.

“What we learn from FreshDirect will be invaluable as we plan our own profitable e-commerce business for the UK.”