Morrisons has refused to comment on the move but DLKW Lowe says it has decided not to repitch.
“Morrisons has changed a lot this year and it is clear we’re not the right agency for them going forward,” says Richard Warren, Mullen Lowe Group’s UK CEO. DLKW Lowe’s Christmas ad for Morrisons is thought to already be completed.
Newly appointed supermarket chief executives changing their advertising teams isn’t anything new as Tesco’s Dave Lewis proved when he hired BBH.
However, Marketing Week understands that Morrisons chief executive David Potts is considering a full agency review.
A senior source has also claimed that Morrisons has already met with five ad agencies as it looks to replace DLKW Lowe.
Since March, Morrisons has been without a marketing director after Potts parted ways with group customer marketing and digital director Nick Collard.
But the source claims Collard’s replacement Andy Atkinson, who was appointed on an interim basis, is the front runner.
So what’s next?
Despite shifting its ad agency, marketing is still a long way down Potts’ agenda according to Kantar Retail analyst Bryan Roberts.
For the 12 weeks ending 11 October 2015, Morrisons saw its sales fall by 1% according to Kantar Worldpanel. And the decline doesn’t show any signs of fading, with the big four price wars resulting in overall grocery prices dropping -1.7% year-on-year for the period.
Morrisons is struggling to halt the rise of Aldi and Lidl having 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.
“When you look at those numbers it’s clear Morrisons has bigger fish to fry than its marketing,” says Roberts. “Potts will need to reposition the brand and sort out its fundamental in-store offer before he can shout about what makes Morrisons great again on TV.”
Mike Tattersall of The Lazarus Partnership believes Morrisons lacks a point of differentiation and is not surprised that it has been slow to appoint a permanent successor to Collard.
He explains: “It has to reestablish a point of difference in consumer’s minds. Its customer satisfaction scores don’t stand out and there is no key specialism. Asda has price, Sainsbury’s veers on quality but no one knows where Morrisons sits. The same could be said for Tesco too.”
A new narrative
Deciding on that point of difference looks to be the tricky part.
Tattersall believes Morrisons should be shouting about its vertical integration model and owning its manufacturing and the impact this subsequently has on food provenance.
However, Bernstein’s European food retail senior analyst Bruno Monteyne dismisses his suggestion altogether.
“Vertical integration just doesn’t work with consumers, they find all the factory stuff boring,” he claims. “It’s one hell of a job for whoever comes in. Maybe Morrisons can talk up its quirky Northern perspective, but there’s only so far an ad agency can go.
“Morrisons owns all of its stores and is confident in its balance sheet so doesn’t appear to be in crisis mode, but maybe it should be.”
But whatever the decision, Kantar Retail’s Roberts has urged Morrisons to avoid price-based messaging.
He concludes: “Price is such a blunt instrument nowadays. What’s the point of talking about price if Aldi is still cheaper?
“Morrisons needs to talk about its fresh food, its provenance and its service. It still has a great story to tell, it just needs to find a unique way of telling it.”