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Morrisons Marketing

Morrisons’ marketing shifts gears with Amazon and general merchandise

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By Jennifer Faull, Deputy Editor

March 15, 2017 | 7 min read

As the financial and brand turmoil around Morrisons starts to subside, the supermarket is pushing its marketing beyond food in order to make sure growth continues.

Morrisons

Morrisons' marketing challenges

Morrisons admits it’s still “very much in the fix stage” of its brand recovery programme, but that’s not stopped it looking at how it’s going to drive growth through its tie-up with Amazon and expansion of its general merchandise division. Now, the grocer’s boss tells The Drum its time marketing followed suit.

"I'm happy with how we’re communicating," said chief executive David Potts.

“But we’re no one club golfer,” he added. “We must be mindful of that in terms of how we communicate; price is massively important to us but the creation of food is as well. And last week, we launched Nutmeg for women. You have to be careful with how you communicate all those different things.”

Since Potts joined Morrisons as chief executive two years ago, the focus has been on getting back to the basics. After an overhaul of its marketing team and agency roster, Morrisons sought to reduce its reliance on price messaging in above-the-line marketing and instead up its credentials as a fresh-food maker.

Since then, the ship has steadied and last week it reported its first rise in profits in six years, boasting a 49.8% rise in pre-tax profits to £325m for the year to 29 January. Meanwhile, like-for-like sales grew 1.7% over the year, buoyed by a 2.5% rise over the crucial Christmas period.

Elsewhere, Morrisons was crowned one of the biggest improvers in YouGov’s ‘Buzz’ (whether someone has heard something positive about the brand) ranking for 2016.

So as it brings more clubs to its game, as it were, the biggest challenge its marketing team faces is ensuring Morrisons' core message continues to come through whilst simultaneously making customers aware of the other facets to the business.

Driving own-brand and local (with help from the Women’s Institute)

The turnaround, said Potts, has been firmly rooted in Morrisons’ commitment to listening to customers. It has lauded the fact that it’s regularly engaging in conversations with thousands of customers and making key business decision on the back of it. Among those has been the roll out of new own-brand ranges.

It’s now seeing the benefit from this investment, with Potts calling out ‘The Best’ premium range, which it launched last October, and the growth of its healthy ‘Eat Smart’ range for “improved quality and competitiveness” and delivering a boost to customer satisfaction last year.

“Where own-brands are trusted, and offer value for money, then customers will switch. We should be part of that,” he said.

It’s started to play with brining these brands to the fore in its above-the-line activity. An M&S Food-style advert ran just before Christmas, putting the focus on its Lobster Mac & Cheese and ended on the new tagline ‘Morrisons: When Only The Best Will Do’.

But where marketing boss Andy Atkinson – who also served as head of brand – will have to flex his creative muscles is materialising Potts’ desire for Morrisons to be seen as grocer for the community. It's been buying fruits, vegetables and conserves from local suppliers as part of a grander plan to “personalise” each store.

“Local can be as big as we can organise it to be frankly,” said Potts.

Potts and his buying team have teamed up with the Women’s Institute and last week embarked (11 March) on a "road show" to talk to producers about whether it could sell what they’re making in stores, be it one, 10, or 100.

“It’s completely reasonable to do so. You can feel a sense of societal change as well and I think we’re on the money. It’s customers who enjoy buying local," explained Potts.

Harnessing Amazon Web Services

The potential for Morrisons to target someone in Somerset with a message about the brand and local products that’s different to someone in Newcastle becomes all the more realistic when you consider the fact that it’s started working with Amazon.

“It’s a good relationship,” said Potts of the tie-up that kicked off as a strictly wholesale last year.

But it’s not just supplying Amazon’s fledgling grocery business with produce that Morrisons is reaping the benefit from. One major by-product of the partnership has been the advice the e-commerce giant has been giving on new technologies.

“We’re talking to Amazon Web Services about new technology [and how to use it] in a cost effective way. We both find it very interesting and helpful,” Potts hinted.

For now, it's meant Morrisons is understanding more about predictive technology and bringing that into buying. But WPP chief Sir Martin Sorrell recently spoke of the online giant’s allure to advertisers and its promise of sharper targeting. And with a £260m advertising and marketing spend last year, Morrisons will be keen to make sure it’s talking to the right people.

Price still "massively" important

But this all comes against an increasingly challenging economic backdrop. Between the uncertainty of Brexit and the falling value of the pound, the job of keeping customers out of the discounters is becoming ever harder. Morrisons has invested heavily in price-cuts, and advertising them accordingly, and in the current headwinds this shows no sign of abating.

“I believe price is massively important to our customers and therefore it has to be massively important to this company,” said the chief exec.

“Regardless of prevailing circumstances, our job remains to make Morrisons more competitive. Clearly, the sharp cut in the value of sterling makes that a challenge for the year ahead but we certainly won’t be bystanders in offering greater value for money at a time of changes in pricing.”

From a marketing point of view, Potts said it now needs to “help consumers recognise the value in a price, rather than seeing it as simply lower than the price before.”

“So, as we simplify the company we need to find a way to project that without having to use price cut [messaging]. When we stopped talking in ‘claims’ (half price, BOGOF etc) and there’s definitely been value in that because customers have said they think our prices look clearer," he explained.

General Merchandise

The final marketing challenge Morrisons faces is in bolstering its general merchandise.

Rivals Sainsbury’s and Tesco have both committed ad budgets to growing general merchandise in the coming year – namely clothing. On this department, Morrisons has generally lagged; it launched its first clothing line – Nutmeg – for children in 2013 and only this month ventured into adult ranges. However, Potts said that within 10 days of releasing its Ladies range in a handful of stores it had sold over 75,000 garments.

While Sainsbury’s and Tesco have both recently appointed creative agencies to manage the marketing for these divisions separately, it seems Morrisons is still working out the best way to draw attention to its new offering.

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