THE chief executive of Wm Morrison said the company was up to a decade behind its rivals as he revealed plans to open convenience stores in Kilmarnock and three other Scottish locations as part of a drive to open 100 local outlets by the end of the year.

Dalton Philips, who has seen the market share of the UK's number four grocer slide since joining three years ago, yesterday said Morrisons was lagging behind its competitors.

But he pledged that a move into the convenience sector and online shopping as well as a massive upgrade of its systems would see it transformed by 2015.

Mr Philips, who succeeded Marc Bolland when he left to run Marks & Spencer, said: "Big changes were needed when I arrived.

"We found ourselves five, even 10 years behind.

"While we have made real progress in closing the gap, we are not there yet but we will have done so by 2015."

He complained that he was faced with running a 21st century business using 20th century technology.

Staff were counting cash by hand and checking and ordering goods with pencil and paper, he said, with managers having little idea what was in stock. Its information technology system also restricted it to having no more than 500 stores.

Morrisons has spent £300 million updating its systems, including on the ongoing roll-out of a tablet-based system for stock checking.

"It means we can compete on a level playing field for the first time and build on the enormous strengths in our business," Mr Philips said.

He said Morrisons could no longer ignore the convenience and online sectors at a time when it accounted for 50% of growth in the industry.

"In a retail business, indeed any business, you need to be where the growth its," he said. "It is clear we were not."

The likes of Tesco and J Sainsbury have massively increased their convenience store estates in recent years, confident they can pick up market share in a sector dominated by small and independent operators.

Morrison's convenience store estate will grow from around 20 now to more than 100 as it seeks to cater to cash-strapped shoppers who are going to stores more frequently to minimise waste.

The chain recently snapped up around 60 stores from troubled retailers HMV, Jessops and Blockbuster.

Around half the space in each of its convenience store will be dedicated to fresh food.

However, more than half the stores are pencilled in for London and the south-east, where Morrisons currently has a very small presence.

In Scotland, where the acquisition of Safeway in 2004 saw it become market number three, it plans a convenience store in Kilmarnock. It also intends to open a couple in the Lothians and another in north-east Scotland.

Morrisons plans to launch an online grocery business by the end of this year after unveiling a tie-up with delivery firm Ocado.

Mr Philips insisted the deal, which includes a £30m licence fee, will cost it less than a third of the amount it would take to build its own business from scratch.

Mr Philips said the online business would be profitable within four years.

Finance director Trevor Strain said that Morrisons was not restricted to the current Ocado delivery area, which excludes Scotland, although the company has not yet confirmed where it plans to launch the service.

Mr Philips said the retailer intended to use the service both as an "offensive" drive into the south-east and as a "defensive" move to protect its position further north.

Morrisons estimates its customers spend £500m a year on online delivery services form other supermarkets.

It has seen its market share drop to 11.6% in recent months.