How Dave Potts has turned Morrisons around

It's not AI or a swanky new app that's behind the grocer's surprise sales rise, just more tills and keener prices.

by Andy Saunders
Last Updated: 09 Jan 2018

Like for likes at Bradford-based Morrisons – the UK’s fourth largest grocer - were up a healthy 3.7% over the crucial festive period, with 2.8% of that contributed by the stores themselves and the rest coming from wholesale operations. That’s well ahead of rather leaner1.7% rise expected by analysts and the shareprice rose almost 3% on the news.

And according to boss David Potts, it’s all thanks to keeping plenty of tills open to minimise queueing, and inflation-beating prices on a key basket of 100 festive staples including mince pies and turkey.  Sales of its premium Signature range also did well, up 25% from last year.

In a retail environment which seems increasingly to be divided into winners (largely the big online operators) and losers (everyone else) the Morrisons example makes an interesting study. Its strong performance is largely a result not of any fancy high tech innovations in analytics or e-commerce, but rather a focus on the basics of pricing and the in store experience.

CEO Potts clearly believes in the old adage ‘Retail is detail’ and has made sure that all the i’s were dotted and t’s crossed, saying simply that ‘more customers found more things they wanted to buy at competitive prices.’.

That’s not to say that the firm hasn’t also been trying new things – online sales rose 10% (albeit from a low base as it plays catch up with rivals) and its efforts to expand its wholesale operations also bore fruit.  Its deal with Amazon – Prime members in London can order their weekly shop for delivery in an hour to a local Amazon locker – performed well, As did a deal to supply tobacco products to McColls convenience stores which could be worth £700m over the course of the year.

The latter is a canny piece of agile opportunism which the Morrisons of a few years ago would probably have missed. When corner shop wholesaler Palmer & Harvey went under before Christmas, McColls was left without a supplier and Potts and his team stepped in. Looking down from the lofty heights of his perch in retail heaven, we feel sure that founder Sir Ken would be proud of this nifty footwork.

On the back of figures from Kantar suggesting that shoppers spent £1bn more on food this Christmas than last, th Morrison’s results are expected to be the first of a string of better-than-expected updates from the supermarkets – Sainsbury’s, M&S and Tesco are also due in this week.

So while food inflation may be bad for consumers, it does present an opportunity for retailers to bag a bit of much needed growth - without having to poach it from a weaker rival, as is the case when prices are flat.

It certainly looks to have been a much happier Christmas for Morrisons and the other supermarkets than it has been for non-food high street retailers, for whom the competition from online has been particularly tough.  The British Retail Consortium has just reported a dramatic slump in non-food sales, now at their lowest point since March 2009.

Having said that, there is no room for complacency. Kantar’s figures also suggest that the biggest winners by far in the festive grocery game have been – you guessed it – Aldi and Lidl. Two more operators whose model is based not on high tech but by a relentless focus on decent quality and low, low prices. 

Image credit: Editor5807/Wikimedia Commons

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