Morrisons’ boss says his strategy will challenge Tesco

11-Jul-2013 - Last updated on 12-Jul-2013 at 08:29 GMT

Morrisons will directly challenge its bigger rivals - such as Tesco - by 2015, claims its boss Dalton Philips

Morrisons’ boss Dalton Philips has claimed his current strategy will catapult Britain’s fourth-largest retailer into a position to directly challenge larger rivals Tesco, Sainsbury and Asda by 2015.

The strategy now in place will lead Morrisons to become “a true national multi-channel and multi-format player” within two years, he said yesterday (July 11).

Morrisons had “huge, sometimes over-looked, strengths” and its focus on affordability and quality was “exactly right for these hard times”.

The retailer’s focus on freshness of food and the provenance of its food was also in tune with shoppers’ buying preferences, claimed Philips.

Horsemeat scandal

“The horse meat scandal confirmed the concern people feel about where their food comes from and the complexity of the food chain,” he added. “With our unique vertically integrated food supply chain, our abattoirs, food manufacturing plants and in-store butchers, bakers and green-grocers, we are fantastically well placed to serve them.”

Management’s decision to concentrate on food – rather than be diverted into non-food areas such as consumer electronics – had been now been vindicated, he said. “We are not saddled with a large network of hypermarkets – white elephants which are expensive to run and don’t meet the needs of today’s customers.” Hypermarkets would prove “a blip in retail history”, he claimed.

Key to Morrisons strategy was developing convenience and on-line.

The retailer lacked both convenience stores or even plans to introduce them when Philips joined the firm in March 2010, he said. The retailer had trialled three types of location – close to home, close to work and in petrol forecourts.

Plus the purchase of the most attractive Blockbuster, HMV and Jessops sites was a vital step towards achieving a convenience food offer. “Our first M local on a Blockbuster site opened this week in Merseyside but this is just the beginning of our expansion plans,” said Philips.

Expansion plans

Morrisons began the year with 12 M local stores but expected to double that number within the next two weeks.

“It will have doubled once more by the end of next month – and doubled again by the end of the year. In some weeks through the rest of this year, we will be opening six new stores. And they will be in places that once you not have expected to find us,” said Philips.

The retailer plans to open 100 M locals by the end of the year. Also the rate of expansion – an average of two new shops every week - will continue into 2014.

Philips denied that Morrison’s controversial partnership with online distribution business Ocado woud prove too costly. “I hear some people say it is too expensive. I really don’t understand this. Compared to doing nothing and letting our business go into slow but inevitable decline? Compared to what others have paid to set up, get right and run their online service?”

Read a transcript of the full speech here.