New chief exec could take Morrisons in new direction

Morrisons’ appointment of Dalton Philips as its new chief executive shows that the supermarket chain is looking on new directions, according to industry analysts.

The chain announced the appointment on Wednesday, shocking city analysts who were expecting the appointment to be made internally.

Dalton’s appointment is in the same vein as the appointment of his predecessor, Marc Bolland, who came from a non-retail background and had little knowledge of the UK retail market, having come from Heineken.

Matthew Piner, retail analyst at Verdict Research, says: “His appointment was so left-field it signals that the chain doesn’t want to continue down the same track. Morrisons is on the top of it’s game but got an eye on the future and looking for the next wave of growth.”

He adds that the appointment of someone from outside the company indicates that the challenges the chain faced in the past few years have been more or less overcome and what lies ahead is a new set of challenges and the Morrisons board think some fresh impetus is needed.

Fraser Mckevit, retail analyst at Kantar Worldpanel (formerly TNS) says Bolland’s efforts at Morrisons were based around a renewed focus on the shopper and “clever marketing ruses” to get shoppers into stores and believes it is unlikely that Dalton will change the chain’s strategy away from its focus on fresh food and value.

However, he says Morrisons will need to look at new areas such as non-food, online and convenience retail if it is to continue its double-digit growth.

Piner believes that Dalton may use his experience outside the grocery trade as the chief executive of Irish department store chain Brown Thomas to expand Morrisons’ non-food offer, which in turn could lead the chain into online. Both non-food and online are areas that Bolland steered away from.

Ed Garner, retail analyst at Kantar, warns that moving too much towards non-food would distance Morrisons from the core values built up by Sir Ken Morrison the founder and former chainman.

“Morrisons is steeped in grocery trading and non-food is a bit of a step away form that pedigree. It doesn’t quite fit with its focus on fresh food which is at its core.”

Bolland is a tough act to follow both in terms of personality and business acumen with industry insiders saying he is virtually impossible to dislike and a great orchestrator of people.

His tenure at Morrisons saw the chain’s complete turnaround from a northern supermarket struggling with the takeover of the Safeway chain into the fourth biggest supermarket chain in the UK. Morrisons is consistently outperforming the market with growth rates above and beyond Tesco, Asda and Sainsbury’s.

Philips is currently chief operating officer at Canadian grocery chain Loblaw and has previously worked for Wal-Mart’s international division in Germany.

Garner says that charisma and personality have become a big part of the retail business in the UK as demonstrated by Sainsbury’s Justin King and Asda’s Andy Bond whose personalities play a large part in deciding the supermarket’s direction.

And while analysts agree that Philips has a wealth of experience and a strong track record, in that respect he is an unknown quantity.

The city will undoubtedly be watching Philips every move when he joins Morrisons to see if he can carry on the momentum begun by Bolland.

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