What Morrisons’ new boss should do next

The six-point list, prepared by the publication’s retail editor, Graham Ruddick, outlines advice on dealing with Sir Ken Morrison, the retailer’s former chairman, the need to re-establish the chain’s identity, re-examining its contract with Ocado and, somewhat unexpectedly, bringing back the window cleaners.

Topping the list is Potts’s relationship with Sir Ken – maintaining a positive working relationship will be critical to his success reviving sales, according to the article. The top two items on the to-do list were: Keep close to Sir Ken and But don't get too close to Sir Ken.

“Sir Ken may be all sweetness and light at first, but the moment he turns against you, watch out, because he will let Bradford and the world know what he thinks of you,”​ advised the article.

Famously dismissed​

Sir Ken famously dismissed predecessor Dalton Philips’s recovery strategy for Morrisons as “bullshit”,​​ last year in the most public of forums – the retailer’s annual general meeting in Bradford.

The Morrisons’ family still retains 15% of the firm and Sir Ken’s views on the retailer landscape and Morrisons in particular remain hugely influential.

While Potts was advised to always agree with Sir Ken in public, he should not believe all he is told. Nearly a decade has passed since Sir Ken led the retailer and much has changed in retailing since then.

Also, the article repeated claims that while the acquisition of Safeway boosted Morrisons to the status of national retailer, it created many problems for its internal organisation. Criticism of the acquisition has previously focused on how the acquisition left the retailer’s computer systems in disarray.

Remember Morrisons is not Tesco was also on the to-do list. Many of the senior Morrisons executives are former Tesco men – including chairman Andy Higginson and finance director Trevor Strain. But the Bradford-based retailer did not have the scale to battle Tesco or Asda on price and suffered both the lack of a very large convenience store estate and a well-established online shopping offer.

Point four on the to-do list was to re-establish Morrisons’ own identity. Sir Ken, other former Morrisons executives and City analysts, such as Shore Capital, have long criticised the retailer for losing contact with its roots.

Losing contact with its roots​

“The company flip-flopped from focusing on the quality of its fresh food – hence the installation of misting machines on fruit and vegetables – to an all-out price war on discounters​,” claimed the article.  

While lowering prices to battle the discounters and other big four supermarkets was essential, it was not enough alone to revive the troubled retailer, said the article. The solution may include withdrawing from unprofitable Safeway stores.

Questions have also long surrounded its heavy commitment to food manufacturing​. But some commentators even suggested the retailer did not stress enough its firm grip on the supply chain during the horsemeat crisis of 2013.

Reappraising Morrisons’ relationship with Ocado was also on the list. Echoing the views of City analysts, including Shore Capital, the article claimed the bigger winner from the £216M, 25-year deal was Ocado.

Finally, point five on the list was to bring back the window clearners. While cancelling contracts to clean windows in a bid to save money may seem trivial, it was regarded as part of a wider decline in standards at the chain’s stores.​

Rapid progress would need to be made if Potts was to avoid the fate of his predessor, the article concluded.

Read the full article here​.