Morrisons enters the online market - but is it too late?

Laura Kuenssberg

Former Business Editor

Morrisons made their first home delivery today. Credit: Twitter / Morrisons

Dalton Phillips, the chief executive of Morrisons, had an early start this morning - 5am to be precise - at his company's new online distribution factory in the Midlands.

After lagging behind competitors for years, saying web based shopping was not profitable, the Yorkshire-based supermarket is now launching a full online shopping service and he was there on the first round, delivering to Kate Goodhew near Coalville in Leicestershire.

But today's early start might not be enough to make up for the business being late to the online market which is growing massively as today's British Retail Consortium statistics show.

The company had a dreadful Christmas, have had to issue a profit warning and has fallen behind in online, the speed of opening high street convenience stores and the discount stores like Aldi and Lidl are grabbing business too.

Phillips admitted: "I wish we'd started earlier...we are going from a standing start ... all of our competitors are in it and we are not".

But he told me he'd been surprised at the speed UK shoppers have moved online, with an increasingly sophisticated and demanding consumer.

Using technology developed by Ocado, Morrisons is now piling into online and the firm hopes to be able to deliver to half the households in the country by the end of the year.

But add together changes in technology, five years of falling disposable incomes and aggressive new discounters too, there is considerable pressure not just on Morrisons but on the rest of the middle market players. Phillips said: "Clearly we have to be careful".

And it is unlikely to get any easier.

Amazon could move into the UK grocery market, according to Iceland's ex-boss. Credit: Chris Radburn/PA Wire

Bill Grimsey, the former boss of Wickes and Iceland, told me that one of the big four supermarkets is likely to disappear in the next five years.

He predicted that Internet giant Amazon is likely to move into the grocery market in the UK, already being trialled in the US, and offer goods at prices that are just impossible for others to compete with.

The supermarket business has always been aggressive, but as we become more demanding and less loyal consumers, there is nothing inevitable about the big bruisers' dominance lasting forever.