Morrisons back on the offensive: Has the retailer put its darkest days behind it?

 
Kasmira Jefford
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Morrisons is putting the emphasis back on its stores, with 5,000 more staff set to work on the shop floor in a bid to improve service
David Potts wasted no time in stamping his mark on Morrisons when he took the helm of the retailer in March.

After years of haemorrhaging sales, the ailing supermarket was in urgent need of a turnaround. And for the 58 year-old retail evangelist, that meant not only making sweeping changes at the top – including taking the axe to the retailer’s management board – but even responding to special requests from staff and changing the music played in the supermarket’s stores.

He visited 90 of the retailer’s 500 stores in his first seven weeks to listen to what staff and shoppers had to say and has responded by pledging to add over 5,000 staff to the shop floor, improve product availability, reintroduce more staffed checkouts, and ordered a spring cleaning of its stores.

“I honestly believe that if we listen hard to customers and staff then we won’t go so far wrong. They already hold the keys to the kingdom... they know why people choose Morrisons,” he told reporters last month.

Now, almost three months into the job, Potts has made his first offensive move against rival discounters after launching his first significant round of price cuts yesterday on 200 everyday goods ranging from tuna to sugar.

Although analysts say it is still too early to call the shots, there are signs that Potts’ efforts of the last three months may be already bearing fruit.

Recent data from Kantar Worldpanel showed promising signs of recovery, as Morrisons outperformed its other big four rivals to post a rare sales rise in the three months to 24 May.

HSBC’s David McCarthy cautioned that part of this uptick in sales will be due to Morrisons now trading against easier comparatives following its aggressive price investment last year, flattering its performance.

But Shore Capital’s Clive Black added that Potts’ “unrivalled” experience of the grocery sector (he started his career as a shelf-stacker at Tesco) and the “considered manner” in which he is going about things also bodes well.

“The big difference between Dalton Philips and Potts to our minds is experience, perspective and insight plus an unrivalled understanding of the British superstore grocery scene,” Black told City A.M..

“After a period of considerable visiting, listening and observation, Potts is now starting to make more discernible front-end decisions, on which we expect a lot more.”

Credit has to be given to Potts’ predecessor Philips who instigated Morrisons’ £1bn three-year price cutting plan in March last year. However the move came too late and followed a number of errors including Morrisons’ ill-fated acquisition of Kiddicare and its late entry into convenience and online.

Philips was also criticised for taking Morrisons too upmarket by introducing “fresh format” stores and investing in US-style vegetable misters.

With a new chairman and chief executive in place and a renewed focus on its core business, Morrisons hopes that it can put its worst years behind it. After culling most of the management team, Potts still needs make some key hires. He is also under pressure to show that he recognises that Morrisons is a different beast to Tesco.

Potts will update the market in September with his full strategy. And with Morrisons’ 87-year-old lifelong president giving a public show of support to the new management at the annual meeting last week, Potts certainly has plenty of time to prove his worth.

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