A collection of minor celebrities has helped supermarket chain Morrisons out-manoeuvre Tesco in the grocery wars.
It is no small matter to grab market share away from the runaway leader of the UK grocery scene, yet Morrisons appears to have achieved just this in recent months. The UK’s fourth largest supermarket chain has outgunned Tesco with a heavyweight advertising campaign led by C-list stars Denise Van Outen, Lulu and Alan Hansen.
Tesco’s Spice Girls ads at Christmas, promoting its food and non-food goods, proved no match for Morrisons’ high-spending campaign trumpeting the resurgent chain’s freshly prepared food and aggressive discounting.
It has emerged that Morrisons has significantly boosted its market share after outspending Tesco, and the other leading supermarkets, on advertising during the Christmas period. Morrisons splashed out £29m on ads in the fourth quarter of 2007, some £2m more than Tesco and nearly a third more than Asda and Sainsbury’s, according to Nielsen Media Research.
This investment appears to have paid off. Morrisons has seen its market share power ahead to 11.6% in the 12 weeks to February 24th, up 0.5 of a percentage point compared to the same period last year, according to TNS Worldpanel. The chain says it has gained an extra 500,000 shoppers a week. By contrast, Tesco’s market share slipped to 30.9%, down from 31.3% last time.
Edward Garner of TNS says Morrisons has taken market share “across the board” although he believes it has come from “Tesco more than most”. One insider disagrees, saying switching data suggests Sainsbury’s and Asda have lost more shoppers to Morrisons than Tesco. However, Sainsbury’s lost just 0.1 percentage point of share in the period and Asda held steady.
One observer points out that it is easier for Morrisons to increase sales than Tesco since it is starting from a lower base. He adds: “Tesco will take market share back, there will be share shifting between all the stores. People have a lot of choice now the supermarkets have got their acts together, compared to three years ago when Sainsbury’s, Asda and Morrisons were all in a mess.”
Meanwhile, a Tesco spokesman says: “Market share data does fluctuate from month to month and we prefer to concentrate on our long-term growth strategy.” The chain has come under further pressure this week after one City analyst claimed that its launch of the Fresh & Easy concept in the US had performed below expectations. Some believe the US foray has taken Tesco’s management’s eye off the ball in the UK.
Morrisons’ £450m store and marketing make-over, announced last year by new chief executive Marc Bolland, a former Heineken marketer, has helped transform perceptions of the chain, especially in the South and Scotland. As Bolland says: “This campaign told customers things they did not know about Morrisons, and they liked what they heard. We welcomed many new customers into our stores at the end of the year as a result and, importantly, they kept coming back.”
When Morrisons acquired Safeway in 2004 and converted its stores to its own fascia, traditional Safeway customers, especially in the south, stayed away in droves from the rebranded stores. The refurbishments introduced a “market street” concept, which attempts to re-create the lively atmosphere of a street market within the store through a maze of stalls selling fresh fish, bread and meat counters interspersed among fresh fruit and vegetable stands. The celebrity ad campaign which launched last summer, created by Delaney Lund Knox Warren, invited many of those former Safeway shoppers to give Morrisons a shot.
“It’s a very simple advertising story,” says DLKW chief executive Mark Lund. “People outside the heartland of the North didn’t know the Morrisons story and maybe resented the chain because it had taken over Safeway, which was a brand they did know and quite liked. The advertising says simply that Morrisons makes and prepares more fresh food in-store than any other supermarket. It is classic advertising – if people don’t know the brand’s story and you can do ads that are engaging and people like what they see, they will come back for more.”
The celebrities were selected as people with a reputation for demanding quality, he adds. But he plays down the idea that Morrisons’ share boost has come from outspending the competition on ads. “Marketing experts say you need a 10% increase in share of voice to get a 1% increase in market share. We spent a bit more than Tesco but gained rather more market share.”
In its full year results for 2007 published last week, Morrisons revealed profits had almost doubled to £612m on sales up 6% to £13bn while like-for-like sales, excluding petrol, increased 4.6%. Tesco managed 3.6% like-for-like growth over Christmas. The results were the swansong for chairman Ken Morrison, who steps down after 55 years building the chain.
A rival advertising source says the Morrisons ads have cleverly made a generic statement about freshness – something all supermarkets claim – into its own property. This is reminiscent of Heineken’s attempt to “own” the notion of “refreshment” in its “refreshes the parts other beers do not reach” campaigns of the Seventies.
The source says: “It reeks of somebody coming in and re-engineering the marketing from inside out. I wouldn’t say the Morrisons recovery is advertising led, but you could say all the different elements have been cleverly cemented together by the ads.”
He says the ads are derivative of the Marks & Spencer celebrity campaign, although Lund says: “M&S is using models as mannequins, they don’t speak and they don’t express an opinion. Morrisons is about people expressing a very firm opinion about what they want.”
According to Morrisons marketing director Angus Maciver, brought in from Prudential by Bolland in November last year, the chain has managed to dominate perceptions of freshness. Researchers put the statement to shoppers: “They source, produce and prepare a lot of their own fresh food”. While 18% of respondents agreed this was true of Morrisons in June, by November – after the campaign had broken – this had rocketed to 45%, far above the figure for supermarket rivals. Maciver reveals a new direction for the advertising. “For the future, expect us to do more to communicate our provenance message,” he says. The chain is expected to highlight its British produce.
One fortuitous factor that could work in Morrisons’ favour is its low proportion of non-food sales compared to rivals. This has helped in its quest to become a specialist food retailer and means it will be less exposed to the downturn in retail spending. Its positioning as the “food specialist for everyone” is similar to the Marks & Spencer “exclusively for everyone” tag that was ditched in favour of “Your M&S”.
Advertising has clearly played a central role in Morrisons’ bounce this year. But if the chain has to outspend its rivals to lure away their shoppers, it may become addicted to big-budget ad campaigns which could ignite a costly supermarket advertising war. This would give a boost to UK media owners and ad agencies as well as providing work for C-list celebrities.