THE debate being waged over whether Morrisons should sell some of its freehold estate surely misses the point about the grocery chain’s future. There is nothing wrong with the structure of Morrisons’ estate that a little tinkering can not remedy. And it will remain, as it has insisted, “overwhelmingly freehold” – that is as long as activist investors such as Elliot Advisors do not push it to go further.
Rather it is Morrisons’ late entry into the online grocery business, which it is tackling with the Ocado deal, and its poor trading in its stores that it needs to address first. Rapidly growing competition from the discounters Aldi and Lidl should be at the top of chief executive Dalton Philips’ list of priorities.
Operating in Morrisons’ northern heartland, this Christmas highlighted how much of a threat the discount retailers now pose, with Philips admitting himself that the group missed out as customers chose to stay put with discounters rather than trade up as many usually do over the festive period.
Growing its convenience estate and investing in a more up-to-date vouchering system to rival those of Sainsbury’s and Tesco are pressing issues Morrisons needs to tackle to safeguard its future in the war of the supermarkets.
Preserving a majority freehold estate may have been top of Sir Ken Morrison’s priorities during 50-year reign, but Philips has more urgent issues at hand.