Bridging the north-south divide

Consumers are finding more reasons to shop at Morrisons, with like-for-like sales increasing by 6.6% in the 25 weeks to July 23. The improved performance follows a turbulent period at the UK’s fourth-largest supermarket chain, which struggled

With the Safeway takeover and boardroom battles finally behind it, Morrisons can concentrate on development and building its brand in the South. By Ian McCawley

Consumers are finding more reasons to shop at Morrisons, with like-for-like sales increasing by 6.6% in the 25 weeks to July 23. The improved performance follows a turbulent period at the UK’s fourth-largest supermarket chain, which struggled to bed in the 450-plus Safeway portfolio acquired for &£3bn in March 2004, and experienced a bitter boardroom battle over its new chief executive.

Now observers say the retailer should be able to look forward to a period of stability. Former Heineken chief operating officer Marc Bolland is set to take the reins on September 1 and chairman Sir Ken Morrison has finally confirmed he will step down by January 2008. According to TNS Worldpanel, Morrisons’ share of the UK grocery market reached 11.3% in the 12 weeks to July 16 – slightly down from 11.5% in the same period of 2005, but equal to the figure for the 12 weeks to May 21 this year.

Ed Garner, TNS Worldpanel communications director, says: “Morrisons is a pretty sound operation. It is concentrating on the day job – running its stores rather than selling them off.”

With its decline apparently arrested, Morrisons can address the key issue of brand building beyond its core Northern market. Buying Safeway has given it access to a more upmarket, wealthy demographic in the south of England. But retail experts believe Morrisons has yet to make the most of this expansion.

Garner points out: “Ask Northerners to describe a fictional Mr Morrison character and they would say he’s a solid Yorkshire butcher wearing an apron. Ask people in the South and they would have far less of a grasp on his personality.”

Last week, Morrisons confirmed the appointment of Delaney Lund Knox Warren & Partners to handle its creative advertising account. Observers say one reason for ditching Manchester-based incumbent BDH/TBWA was that it wanted a more nationwide approach, to mothball once and for all its “flat cap” Northern image.

A Morrisons spokesman refuses to comment on speculation that it is to drop its long-running “More Reasons” strapline. But he says/ “Any change of direction is clearly something that the new chief executive would want to be involved in.” Industry sources say the company has genuinely not made up its mind about future slogans. Meanwhile, Morrisons continues to deny that a review of its media account, currently handled by Mediaedge:cia Manchester, is planned (MW July 27).

Despite the recent upturn in fortunes, some experts are sceptical about the future. Paul Cousins, director of Catalyst Marketing Consultants, says: “Morrisons has been left out in the cold by the relentless might of Tesco, Sainsbury’s getting its act together and Asda’s support from Wal-Mart, the world’s biggest retailer.

“After store location it’s a brand choice for shoppers – the other three have carved out a clear positioning. Has Morrisons? I would have to say no. It’s always a challenge in advertising to overcome a prejudiced image, and it needs to convince Southerners that it is not a dour Northern store.”

Yet Morrisons appears to have the backing of suppliers – a clamorous source of discontent in the retail sector – for its ongoing turnaround strategy. According to David Bridges, managing director of Billetts Marketing Sciences, the supermarket has introduced more inclusive procedures for dealing with suppliers, such as sharing EPOS (electronic point of sale) data and audits of in-store executions.

Bridges says: “Suppliers need Morrisons to succeed, because they will then have another major store owner to deal with outside the top three. It is seen as a straight-talking negotiator.”

Non-food is unlikely to be a major focus for Morrisons in the short term. Supermarkets are stealing a greater share of the market than ever, with Tesco about to beat Argos and Homebase parent company ARG to the number one spot (MW last week). But Garner feels Morrisons will concentrate on its traditional food offering, such as the Market Street fresh produce theme, and operate a limited edition, “when it’s gone, it’s gone” approach to non-food.

He adds: “There is work to be done. Morrisons has got to realise it has more ABC1 shoppers now. Without going all Waitrose and dispossessing loyal shoppers, it has to appeal to a wider market, which is probably why it has renewed its interest in The Best range. The future may not be spectacular, but it looks a little brighter.”

No doubt with a sigh of relief, Morrisons is discovering that life after Sir Ken might not be so gloomy after all.

Company history

⢠1899 Egg and butter merchant William Morrison, father of Sir Ken Morrison, opens a market stall in Bradford

⢠1958 A small town-centre shop opens with three checkouts

⢠1961 The company’s first supermarket opens in Bradford

⢠1967 Morrisons goes public. The share offer was 174 times over-subscribed as more than 80,000 investors tried to purchase shares

⢠1998 Morrisons opens its first store in the South in Erith, Kent

⢠2000 Ken Morrison awarded Knighthood in the 2000 New Year’s Honours List. First Welsh store opens

⢠2004 Morrisons opens first Scottish store and completes the acquisition of Safeway, creating the UK’s fourth-largest supermarket group.

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