Morrisons will undertake yet another in-store overhaul as it turns its attention to the remaining large supermarket portfolio following the sell-off of its M Local convenience arm
It comes after the much debated sell-off of Morrisons’ convenience arm, at a £30m loss, along with the closure of 11 underperforming stores,. Chief executive David Potts said today (10 September) that its remaining supermarkets will have to work harder to remain viable.
Part of the solution is a greater focus on personalising for the local community and opening its space up for use beyond shopping to lure customers away from the discounters.
For example, stores in the centre of a populous student town will serve up different ranges, pricing and promotions to that of a store in a predominantly Muslim community, he said, as well as allowing local groups to use its carparks and cafés space.
“These are things not available online or in discounters,” he proclaimed.
And differentiating from the discounters remains a challenge with Potts admitting its prices still have some way to compete. “The German’s have occupied the British pricing position for some time. But we’re not a one club golfer,” he said defiantly.
Marketing itself as a value retailer is unlikely to change but the retailer is looking to invest more in promoting its quality proposition, particularly for its ‘Made by Morrisons’ range where Potts claimed it is making progress. Moving forward, its house brands will be the focus of its traditional and digital marketing spend, a move indicative of a wider industry shift to focusing on own-brand.
Finally, for the second time in two years, Morrisons will be overhauling its in-store layout and design. The last investment in such a strategy under former chief executive Dalston Philips saw the introduction of controversial ‘mist machines’ and fresh produce – including fruit and veg, meat, fish and cheese – brought to the front of the store. The latter will remain though it will be made more coherent and will also shout louder about its British heritage within its in-store communication.
Expanding its digital offering
With its convenience arm gone, Morrisons is looking to expand the brand presence online. A current deal with Ocado is under review, although Potts stressed that it’s about how the two expand the operation to cover more of the UK rather than a renegotiation.
At the moment, Morrisons is only able to deliver online goods to 52 per cent of the population with the North East and South West of England as well as the whole of Scotland unable to access its online offering feature.
“It’s right to ask how we expand,” he said. “We have a minimal brand presence in some areas that digital can extend. As with convenience we need to consider how we grow with the internet and Ocado is part of the broader digital opportunity.”
Match & More
Morrisons’ loyalty scheme is also under the microscope after widespread complaints that it’s simply too complicated. It was designed to allow customers to comare their grocery baskets to all of the ‘Big Four’ supermarkets as well as the discounters and gives them points on their loyalty cards, rather than cash back, if another supermarket is cheaper.
Attempts to communicate the benefits have landed Morrisons in hot water with the Advertising Standards Authority on a number of occasions, meaning despite being nearly a year old, it's a scheme that remains largely misunderstood.
“The truth is some customers quite like it and some customers don’t understand it. When you hear customers talk about their trip they want it to be straightforward and when you ask customers to do the maths you’ve taken the wrong turn,” he said. “What’s important is that customers get where the value is quickly.”
Overall, Morrisons said it will take years, not months, for any changes to bear fruit. The retailer's first half like-for-like sales were down 2.7 per cent leading total turnover to fall 5.1 per to £8.1bn.
Underlying profit before tax was down 35 per cent to £117m.