Morrisons CEO David Potts says buzz is returning to the ‘underdog’ brand after Christmas success

After reporting its first positive sales in well over a year, Morrisons’ CEO David Potts has told Marketing Week that the big four supermarket is starting to see positive results from its brand development strategy and is standing out from rivals due to its in-store food making capabilities.

Morrisons saw like-for-like sales rise 0.2% for the nine weeks ending 3 January as it beat analyst expectations of a fall as steep as 2.8%.

And speaking on a press call today (12 January), Potts said that brand building and a focus on improving the in-store experience were making a difference.

He told Marketing Week: “We are still the small guy in the squeezed middle and we are the British underdog. But it is a special moment for Morrisons as customers are saying ‘we know you are different from the rest because we see you making your own food!’

“When we think about the brand and how the identity of the company can grow in confidence it is around being a food maker as well as a shop keeper.”

David Potts, CEO, Morrisons

There were positive signs in the festive trading that shoppers are returning to Morrisons with the number of like-for-like transactions up 1.3% a year.

Potts added: “Customers see a real value to walking into a store and watching someone make a fresh pizza. It can return a buzz to our stores and make people aware that at Morrisons we have our own unique way of retailing.”

Potts also credited the supermarket brand’s ‘Fresh Look’ programme – having refitted 47 stores with 450 to go – for creating word-of-mouth buzz.

A new marketing boss

One of the big announcements today was that Morrisons had taken on interim marketing director Andy Atkinson on a permanent basis.

And Potts, who wouldn’t comment on the retailer’s progress in finding a new ad agency to replace DLKW Lowe, says the plan is to continue to feature Morrisons colleagues within its above the line marketing in a similar fashion to its Christmas campaign.

Morrisons staff play a central in its Christmas ad campaign
Morrisons’ staff played a central role in its Christmas ad campaign

“The company enjoys creating ads with our own people,” he explained. “We got a lot of positive inbound Twitter comments about our own people being in the recent ads as it was authentic. The butcher, the baker, the fishmonger offering advice to customers was a nice touch at Christmas.”

However, moving forward, he reiterated that marketing is not Morrisons’ biggest priority and that store and product improvements were the focus.

“It harks back to the old story that I’m sure half our advertising isn’t worth doing but we are not sure which half,” he joked. “Christmas ads are Christmas ads, you don’t sit at home on the 25 December eating the Christmas ad.”

Atkinson, in particular, will “represent and have full accountability for the customer,” according to Potts.

He clarified: “Andy is close to customers, he has done the job pretty much since I’ve been here on an interim basis so he should carry on doing exactly what he’s already doing.

“He’s a quick learner and we are a physical and digital business so Andy has to be at the forefront as we increasingly define what the company stands for around offering great value on prices and experiences.”

Price cuts, store closures and online growth

Morrisons announced it would be closing a further seven unprofitable stores today. This adds to 21 previous closures and the disposal of its convenience business, which saw it sell off 140 M Local sites. But Potts says Morrisons will now “draw a line” under store closures.

The chain said it received a big boost from its ecommerce operation with online sales doubling last Christmas. This contributed 0.9 percentage points to the headline like-for-like figure and offset a fall in sales at Morrisons’ supermarkets.

And Potts said its Nutmeg clothing range, which is now worth £100m as a business, was also beginning to “strike a chord with customers” and would be rolled out online by the end of March.

It also appears likely that Morrisons will persist with price cutting as it looks to entice customers away from Aldi and Lidl. On Sunday (10 January), Asda announced a further £500m in price cuts and in the call Potts says Morrisons will also need to ensure it remains “competitive”.

Being cautious

Last year Morrisons reported a 52% drop in annual profits to £345m – its worst results in eight years. The retailer also dropped out of the FTSE 100 list of the UK’s most valuable companies in December.

And Potts was keen to point out that despite today’s good news, there is still a long way to go.

He concluded: “We are on a long journey to revival. We will make further progress by focusing on core supermarkets but it is unlikely to be in a straight line.”