Morrisons is looking to areas such as marketing, logistics and head office for cost savings across the business as it looks to “simplify and speed up” and build closer relationships with its customers.
Like-for-like sales were up 2.8% and profit up 11% to £374m in 2017, marking the supermarket’s third consecutive year of growth. And at an event to discuss its preliminary results, CEO David Potts said the marketing cost savings are part of “careful programmes” that will continue into 2018/19 in an effort to “simplify” the relationship with suppliers and develop a more direct relationship with consumers.
“The advent of digital marketing is a competing source of revenue for said marketeers and the advent of [loyalty programme] More gives us a very intimate and direct relationship with customers,” Potts said.
“It’s just part of a more one-to-one world that marketing has generally moved to. We continue to market the business across all media. I’m very pleased with the common sense marketing that we’re executing.
“But like all marketing [and as John Wanamaker said], probably half of it is wasted.”
Wonky, British and local
Morrisons’ growing investment in local food-makers is playing an important role in the recovery of the business, Potts said, while outlining its ambition to become “truly local” within the next few years.
“This business needs to have less national duplication of merchandise and it has to have more local merchandise as we become truly local and truly integrated locally in the years ahead,” Potts said..
“Of course there is more to do and we’re only at the start of this journey. It’s an important journey for the recovery of this company.”
In 2017, Morrisons added 750 new local items and 200 British suppliers, with local sales up 50% to account for two-thirds of the supermarket’s total sales.
Consumer demand has grown too, with the number of Morrisons customers ‘interested’ in buying local produce rising 7% to 68% over the last 12 months.
Morrisons is looking to continue to drive that growth through local food events. It is also embracing what it calls the ‘advent of the wonky’ as it looks to support growing communities in the UK and combat food waste.
“The advent of the wonky means we can look at the whole field and take it all. The wonky asparagus is as important to us as Class One asparagus,” Potts explained.
“Wonky and Britishness and localness is bang on for less and less edible food waste, right back into the supply chain, and we’re properly committed to selling as much of it as we can get our hands on.”
Bryan Roberts, global insight director at tcc global, says a continued focus on ‘local’ is proving to be a successful strategy for Morrisons.
“Morrisons’ narrative has always been centred around authenticity and provenance when it comes to products, and continued efforts here will be welcomed by consumers,” he says.
“We’ve seen a noticeable shift in-store, with increased investment in British businesses and farmers. If Morrisons continues on this path, it will be one of the more successful supermarkets in 2018.”