Morrisons moves into e-commerce with Kiddicare purchase

15th Feb 2011 07:25

Supermarket chain Morrisons has made its long awaited first step into the online retailing world with the purchase of multi-channel retailer Kiddicare.Morrisons is paying £70m for the company and, more importantly, the rights to its technology platform, which could form the basis of Morrisons own online offering. "This acquisition brings not only a respected, successful and fast growing specialist retailer into the Morrisons group but also a robust, scalable and highly advanced technology platform around which we can begin to build our e-commerce offer," said Morrisons' chief executive officer, Dalton Philips.Morrisons, Britain's fourth largest grocer, intends to build its online non-food business, developing the kiddicare.com platform and management team, launching its first products in 2012.The acquired company, which operates in the baby and infant merchandise category, will continue to trade separately as kiddicare.com, and will continue to be led by Elaine Weavers-Wright, the daughter of the company's founders, and her husband, Scott. The pair will "pursue an ambitious growth agenda," the company statement said.Turnover at Kiddicare in the last full financial year (2010) was £37.5m and has grown by 75% in the past three years. The company operates in a similar space to Mothercare but with a much greater emphasis on its web presence; over 80% of sales are now through the online channel. The company owns a new state of the art freehold distribution facility and operates the largest baby nursery equipment retail store in Europe, based in Peterborough, comprising 160,000 square feet of warehouse, retail and office space. Investment house Matrix described the purchase as "all a bit left field," an expression that may come out of left field to investors not au fait with baseball terms. "The idea seems to be that Morrison will use Kiddicare's distribution system to launch an online non-food business," Matrix said, adding that "£70m is probably not a high price for avoiding the inevitable mistakes that setting up such a business from scratch would cost, bringing as it does a distribution centre, web know-how and tried and trusted picking technology. ""The market was looking for Morrison to launch online and move more effectively into non-food, with an announcement expected at the full-year results on 10 March. This slightly pre-empts that. No doubt, Morrison has seen the rapid take-up of click and collect at Sainsbury (about one-third of Sainsbury's total non-food sales) and wants a slice of the action," Matrix suggested.