Improving the shopping experience is more important than advertising, says Morrisons boss

Since joining Morrisons in March, Potts has adopted a quieter approach to advertising, with a recent TV ad celebrating the return of manned checkouts a rare example of TV spend.

In fact, the Bradford-based supermarket brand dropped its ad spend by 33% year-on-year for the first half of 2015 – the most significant fall of all the big four supermarkets according to figures from Nielsen. A noticeable switch in strategy after previous boss Dalton Philips lavishly signed off on pricey TV campaigns featuring celebrities such as Ant and Dec.

Speaking at a press conference today (10 September) Potts told Marketing Week: “You can’t build advertising without a strong foundation and I think it falls to the firm to ensure that the shopping trip gets better.

“It is critical that we improve the consistency of the shopping trip and only then can you be more broad-minded on how you bring that to people’s attention. There is certainly a real opportunity to bring to life the story behind ‘Made By Morrisons’ and our vertical integration and manufacturing.

“What’s encouraging is customers are telling us that there is still an affection for the brand and that our British heritage makes us unique.”

David Potts, CEO, Morrisons

Potts admitted that the retailer was approaching marketing “in a different way” and suggested that digital marketing could now be more important to the brand.

He added: “What is happening, if I look across the industry, is clearly people are saying expenditure has shifted a bit from traditional and tabloid media spend to more digital media. It perhaps has a broader penetration and greater value for money.”

In March, Morrisons’ group customer and marketing director Nick Collard left the supermarket as part of a head office restructure, which has seen the leadership team go from 110 roles to just 65. Collard was replaced on an interim basis by own brand and sourcing director Andy Atkinson.

Subsequently, Morrisons has admitted it is on the lookout for a customer director as the final appointment on its new look board.

Potts told Marketing Week: “How we close out the final place on the executive committee is what I am currently deciding.

“What I would say is the person who leads our marketing must feel like they have complete control of the customer’s voice. We’re all focused on customers, sure,  but the person with full control is best sat in marketing. When I talk about a customer director that’s my rationale.”

‘Confusing’ Match and More loyalty scheme

Morrisons’ controversial Match and More loyalty cared is currently under review and Potts hinted that he isn’t the biggest fan.He said: “Price remains crucial to our brand, our customers are on clear on that, so it will always be firmly on our agenda.

“However, when it comes to Match and More, some like it, others don’t get it. I think the moment customers are confused about the math, you know you might have taken the wrong turn.”

Potts was also keen to distance himself from a £1bn commitment made 18 months ago by Morrisons to lowering prices.

Asked what would constitute as a successful first year in charge, he replied: “When we have an event like the Rugby World Cup, Morrisons has to make sure we are absolutely all over it with our prices and relevant product ranges.

“Therefore, this first year is all about listening to customers and making the shopping trip consistently great. It isn’t about hitting a figure.

“If we can achieve those two things, it has been a successful year.”

Falling profits and sales

Potts’ comments come as Morrisons today reported a drop in like-for-like sales of 2.7% in the six months ending 2nd August.

Total sales fell 5.1% to £8.1bn for the period, while pre-tax profits plummeted 47% to £126m, mainly due to an £87m hit on restructuring costs. Perhaps most worryingly the LFL number of transactions also fell 2.6%.

Fresh from selling its entire 140-store strong M Local convenience operation at a £30m loss, Potts said the retailer would now look to expand the ranges within its petrol store forecourts to provide consumers with an alternative convenience option.

Morrisons also announced that it would be closing a further 11 unproftitable supermarkets today, resulting in 900 job losses. Potts said he was changing the approach to its stores and wants to make them more community focused and to provide more reasons to visit by trialling services such as postal pick up and adding more pharmacies and cafes.