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Morrisons Supermarkets

‘This is not a quick fix’: Morrisons steadfast on strategy and will continue to push fresh, food low price message

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By Jennifer Faull, Deputy Editor

January 13, 2015 | 3 min read

Morrisons remains adamant that its pricing strategy and marketing focus on fresh food will steer it through the turbulent conditions in the grocery sector, despite a 5.2 per cent fall in Christmas sales.

In a media call following its disappointing third quarter trading statement, chairman-elect Andrew Higginson praised outgoing chief executive Dalston Philips.

Philips was at the helm last March when the supermarket invested £1bn in a three year price-cutting plan, began pushing its ‘fresh food’ credentials and revamped a number of stores to focus on fresh fruit, vegetables and meats.

He maintained that despite Philips exiting to make way for someone with “a fresh pair of eyes”, the current strategy would remain in place.

“There are no plans to fundamentally change the strategy, how we build that momentum will fall to the new chief executive and executive team here,” he continued.

Higginson said its marketing “is starting to bear fruit”, citing the improvements in items per basket – down 0.2 per cent year on year versus 2.4 per cent the previous quarter – as a signal of its effectiveness.

“’Fresh’ will be at the core of everything Morrisons does. We are a fresh food business and our focus is about neutralising on price and differentiating elsewhere,” he said.

“The gap has been too wide between our price and the lowest in the market and we set out a very clear strategy about how we were going to address that. We want to continue to reduce that gap and differentiate on fresh food.”

Nonetheless 10 stores, with a combined turnover of less than £50m, will be closed in the coming year, affecting over 400 employees.

“It was a very difficult decision but it is in the best interest of the company,” said Philips.

Higginson added that he was pleased with the performance of its online offering and would continue with its deal with Ocado. He also lauded its Match & More loyalty card although refused to comment on how it performed over the festive period.

However, Philips lamented at not having launched an online service and loyalty card sooner.

“We would have obviously liked to have started online and got our Match & More card out earlier. But we had other stuff to do,” he said.

For the coming year, in addition to its focus on price, improving the in-store experience will be a priority in its battle against the discounter and it will launch “a series of initiatives” in the next few months.

“This is not a quick fix. We want to drive volume growth, like-for-like growth and profit growth through a series of initiatives that will do more for customers. A lot of that in the current climate will be around price but innovating for customers and having better service for customers will be absolutely essential.”

A hunt for a new CEO to take the reins is currently on. The “net will be cast wide” in the search, with current chief financial officer Trevor Strain already discounted having only been at the company for two years.

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