Less than a week after the former Tesco exec revealed five board members would leave the retailer in a management reshuffle, designed to “speed up” the business, a further 20 senior management roles could be axed, according to reports.
A Morrisons spokeswoman said: “Following the announcement of a reshaped management board, we have had a number of redundancy conversations with senior managers at the next level in our organisation. These are aimed at creating a simpler, leaner Morrisons.”
Potts’s actions so far showed that he wanted to bring in his own people and clear out the old Morrisons team, claimed head of the food team at Rollits solicitors Julian Wild.
‘Clearing out the business’
“He’s obviously intent on clearing out the business and wants to bring on his own people and run Morrisons along the lines of old Tesco,” Wild told FoodManufacture.co.uk.
“His chairman [Andy Higginson] is also ex-Tesco and has obviously given Potts full backing to do things his way.”
However, Potts had made some very quick decisions in his restructure of the firm so far, which he’s only been in charge of for two weeks, Wild warned.
Julian Wild:
“I wouldn’t be surprised if Potts comes to the conclusion to sell off its factories and behave more like a retailer.”
“He hasn’t given himself a lot of time to fully understand the business and has made a judgement that some of the people who were at Morrisons before he got there can’t be relied on,” he added.
The retailer’s vertical integration, for example, had to be considered with a lot more care than Potts had given to the retailer’s senior management, Wild urged.
Whether he kept Morrisons’ in-house manufacturing facilities, which some City analysts had said was essential to the firm's success, would make or break his career with the supermarket, he added.
Morrisons was the only major retailer to have its own factories, which prevented it from offering competitively-priced products to its consumers, claimed Wild.
‘A very big question’
“I think whether to keep it or not is going to be a very big question for Potts right now,” he said.
“It’s a huge part of the business, but I wouldn’t be surprised if Potts comes to the conclusion to sell off its factories and behave more like a retailer – I just don’t think the system of making its own products is appreciated by consumers.”
Selling off its factories would also undoubtedly release more assets and give the retailer a lot more flexibility in sourcing competitively-priced products, Wild added.
That advice contradicted the recommendation of Shore Capital, which urged Potts to “weaponise” its food manufacturing base.”
Meanwhile, of the new boss’s first two weeks at the helm of Morrisons, Wild said: “It hasn’t been a surprise that he’s come in and had a major reshuffle.
“But, if anyone is going to turn Morrisons around in such a troubled time for the major multiples, I think it’s going to be David Potts.”
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