Morrisons will face a new IT challenge, after announcing the acquisition of 38 stores from the Co-Operative Group for £223 million.

The supermarket chain posted bumper sales figures this quarter and unveiled its biggest deal since the £3 billion Safeway takeover in 2004.

If the Co-op deal goes through, Morrisons expects to spend £98 million integrating and refurbishing the stores, which will include a large IT integration project.

The news comes as Morrison starts work on a £110 million IT refresh, led by IT director Gary Barr, to migrate to Oracle systems. The store will put in place the Oracle E-Business Suite, Siebel CRM, Oracle Identity Management and the Fusion and SOA middleware applications. The systems will run on HP hardware.

The Co-Operative Group is already an extensive user of Oracle software, which could ease integration challenges.

The IT overhaul was slated to begin this quarter and chief executive Marc Bolland has said that the supermarket chain will begin by rolling out payroll and HR systems. The rest of the Oracle systems are to be rolled out over the next two years.

The IT refresh is part of a £450 million Optimisation Plan that also focuses on store improvements.
Morrisons credited the Optimisation Plan as contributing to its bumper results, stating that 700,000 new customers shopped at its stores each week and third quarter sales up eight per cent year-on-year. The sales growth rate was four times that of rival Tesco, which reported results earlier this week.

The Co-op announced a £1.6 billion deal to buy Somerfield's 800 shops back in July. But in October, the Office of Fair Trading ordered that some 126 stores must be put back on the market to alleviate local competition concerns.

Related articles:

Morrisons Q1 keeps Optimisation and IT plan on track