Morrisons' turnaround: fresh food offer 'has key role'

The supermarket’s priorities were unveiled as Morrisons posted a nearly 50% fall in profits before tax and announced plans to close 11 stores and sell off its convenience stores.

The six point plan included pledges to focus on: competiveness, customer services, localisation, enhanced services, simplification and strengthening of its core supermarket estate.

Shore Capital analysts Clive Black and Darren Shirley said Morrisons’ Market Street concept, which featured fresh food counters and in-store specialists, was part of its “quirky and quintessential style”.

‘Potent footfall driver’

“Its Market Street is structurally differentiated and, if delivered consistently, theatrically and effectively, it can be a potent footfall driver to our minds; as it was in Sir Ken’s [Morrison’s] heyday,” Black and Shirley said. 

“Re-engineering Morrisons is not rocket science but it remains a considerable challenge and opportunity.”

The analysts said Morrisons was reviewing its “somewhat complex” loyalty scheme, while looking at third party providers and upgrading its estate to deliver a better shopping experience.

“From such work, it is hoped that the cycle of improvement can turn, a heavy wheel at this time, when rising basket size and footfall combine to drive same-store sales,” they said.

Meanwhile, Julian Wild, head of the food team at Rollits solicitors, was less optimistic about the supermarket’s turnaround plan.

‘Pretty obvious’ priorities

“To say that Morrisons needs to be more competitive, provide better customer service, be more in touch with their local community, have tighter management and refit stores strikes me as being pretty obvious,” he told FoodManufacture.co.uk. “Who wouldn’t do that?” 

Wild said the “one new initiative” of introducing third partly services would be implemented in a low-cost manner, unlike Tesco’s acquisitions.

“The new ex-Tesco team are embarking upon all the things you would expect but say that the turnaround will take ‘years, not months’,” he said.

“That’s quite a breathing space. Will Morrisons be given that long?”

Ceo David Potts acknowledged that the supermarket faced a “long journey” along the road to recovery.

"The immediate priority is to deliver a better shopping trip to stabilise trading performance,” he said.

“Our six strategic priorities will then deliver improvement in the core supermarkets, where we have the greatest opportunity.”