Morrisons – emerging through the mist

The to-do list at Morrisons goes way beyond turning off the misting machines and will take fresh thinking and a propensity for radical decision making to make an impact. Newly appointed David Potts has decades of retail experience to guide him but that experience was before the radical changes seen in the industry over the last 5 years. Add to that the slow pace at which Morrisons has moved and the to-do list becomes increasingly daunting.

Online shopping, convenience shopping, in store execution, marketing, loyalty cards are just some of the strategic challenges he will face.

Online shopping. Morrisons are now tied into a deal with Ocado which delivers groceries from Ocado warehouses. It is an expensive route to customer and misses out the Morrison’s stores themselves where click and collect could be added to the retailers’ hand. To-do: renegotiate the deal to use Morrisons stores with Ocado’s software and build a click and collect offer.

Convenience stores. M local was a knee jerk reaction in slow motion. Sites were chosen based on quick fixes which have since proven to be in the wrong locations. A site by site review will result in closures but will also provide data to build a better wish list of locations. To-do: use good sites to fine tune the format and deliver the best convenience format from the big 4.

In store execution. Dave Lewis added store hours to ensure disciplines were adhered to and customer service was prioritised. To-do: do the same focussing on availability which has been criticised and service which is a strong barometer of performance and can do the most to rebuild loyalty.

Marketing. Dated is the only word that comes to mind when we think of Morrison’s marketing and as much as the Ant and Dec partnership is a good demographic match, it is boring and does little to engage the customer. The customer’s level of sophistication has been underestimated and must be reassessed to rethink how Morrisons can re-engage with a lost audience. To-do: invite fresh ideas based on the customer they need and not just the one they have.

Loyalty cards. Watching twitter and seeing the number of tweets about lost, missing vouchers and the parody advertising of Lidl last year when Match&More was launched must leave Morrisons in no doubt that it isn’t right. To-do: ditch it. Start again from a simple platform that rewards the customer in an innovative way for changing their shopping behaviour.

The Morrison’s to-do list would be enough to put off a lesser man, but David Potts knows what he has to look forward to, and has a business that is ripe for change. But just in case he needs a little help along the way, Retail Remedy is always ready to take his call.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

warehouse racking

Supply Chains cracking under pressure

There is still a faint echo from the tills ringing on Black Friday and the mouse clicking on Cyber Monday, but that sound is being drowned out by the sighs of frustration from customers waiting for deliveries to arrive. We predicted that some retailers supply chains and processes wouldn’t be able to cope with the volume and frustratingly, we were proved right.

The volume of orders far exceeded expectations, for Tesco and for other retailers including Argos and Marks and Spencer, and the price of that success is the cracks that have appeared in their supply chains: deliveries to customers are late.

The reasons for the delays are varied, anything from shortage of pick and pack hours in the DCs, over capacity for the couriers, or lack of actual stock to fulfil the order. And it isn’t just home deliveries that are affected; there are delays in click and collect too, pointing to logistical capacity constraints.

Added to these woes are in store click and collect processes. For instance, the grocer’s click and collect desk in many stores is at the front door. The queues that build up at peak times impede the entrance and exit, and the boxes that pile up at the desk make working the whole experience frustrating.

The growth of online sales and click and collect as a delivery option has been steep but one that could be predicted. Quite simply retailers haven’t planned for the growth that has so far materialised and are now failing in terms of customer service. An easy shopping experience online, to avoid the crush of shopping in store, results in a crush in store to collect the parcel.

Planning and process are the keywords for the next 2 weeks, and then beyond. Stores must be planning for best/worse case scenarios, whether that adds cost to fulfilment or not because the cost of a customer who hasn’t received their delivery in time for Christmas is far greater. In store processes for click and collect must be as efficient as possible. The physical volume of boxes as well as the quantity of orders and therefore customers must be managed to make the collection (and returns) experience as smooth as possible. Assign a runner to get the parcels from the stock room, and take them to the customer’s car to get them out of the shop.

The cost will be in terms of man hours, which reduces margin, but as Tesco has experienced, a rebasing of margin in order to deliver customer service is an investment worth doing. The Christmas peak may be less pronounced this year as sales have been brought forward thanks to Black Friday, Cyber Monday and Manic Monday but there will still be a peak. Retailers have time to put provisions in place to manage that peak if they are agile enough. If not, expect a peak in customer complaints as well.

Keeping up with Mike Ashley

Mike Ashley, touted as the man with the golden touch, doesn’t quite have all the luck it appears.

He isn’t what you would call a typical CEO: lack of charisma, no publicity, beer swilling and a tendency to park his tanks on other people’s lawns. He has been asked to stand before the Scottish Affairs Committee about his role on the collapse of USC and buy out resulting in 200 redundancies. He is also subject to a formal complaint from his zero-hours workforce who were excluded from Sports Direct’s bonus scheme.

He has kept his Strategic Development Director, Jeff Blue, more than busy buying up shares in House of Fraser and Debenhams, looking for concessional space at a shareholders preferential rate, and tasking him with the Finance Director role while an appointment is made. Jeff Blue has left the building though, leaving suddenly just 2 days before Sports Direct Q1 trading was announced.

On the face of it the business has delivered another strong quarter and the profit forecast for the year on track having tapped into a winning formula of brands (which Ashley bought at a discount) and a ‘pile it high’ proposition. But there are concerns on the horizon.

House of Fraser’s new Chinese owners are not inclined to offer preferential rates or indeed any rates to Sports Direct after the deal nearly knocked their bid off the rails. That may have been a punt that will be costly. The results of the pending inquiries could have financial implications, albeit a drop in the ocean, but the PR cost could be harder to swallow and the lack of senior leadership after Blue’s departure is a worry.

So what next for Sports Direct? Rather than an acquisition drive which is the default setting, a recruitment drive would be a good start. The business is complex, multiple businesses held by a controlling company, with operations and brands internationally. Senior appointments will need to be experienced and have a ‘ready for anything’ approach to business to keep up with Ashley’s ambitions and ego.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

Matalan comes out of the shadows

Family owned Matalan isn’t often talked about. The out of town fashion and home wares retailer operating at the value end of the market competes against the likes of Primark and the grocers, and is, therefore, often overshadowed. However, after a visit to one of its stores recently we got the feeling that Matalan may be about to become more of a threat to its bigger rivals.

The last reported quarter of trading ending in November 2014 didn’t make great reading, suffering as many fashion retailers did, with overly warm weather for the season, however CEO James Hargreaves also reported a resilient margin. Christmas trading didn’t fare much better but news that the retailer came out of Christmas with less residual stock than in previous years was well received as was the prediction of full year profits growth.

In 2014 Matalan moved to a bigger head office in Skelmersdale, opened its first High Street store in Cardiff and signed a lease to open its first Oxford Street store in London which is expected to open this spring. For a retailer that sits under the radar, they appear to be quietly going places.

Its main competitor Primark has a strong High Street presence which Matalan has lacked. However, we predict that the lead onto city High Streets is destined to deliver a good sales density for the retailer if the store that we visited is anything to go by. We were enthused by the clarity of communication, good product quality, strong product mix, fashion led collections, in house designer labels and very good pricing which can easily compete in its market.

Matalan has taken its time to reach the High Street, waiting for the perfect store in the perfect location, knowing that it had to be right. This has undoubtedly held the retailer back in terms of gaining market share in a growth market, but may turn out to be the right decision. Location is everything and the roll out programme to other High Streets will probably be slow.

A refinancing exercise in 2014 has given Matalan the security to invest in the brand and its future and although the efforts that we have seen in store haven’t yet translated into financial results, if Matalan keep on track we certainly expect that the results will come through in the next few seasons. As they say, watch this space.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.

Are High Streets coming back into fashion?

We are all familiar with the cycle of fashion; flares come and go, beards are seeing a growth in popularity and vinyl fights back. In the same way retailing can go in cycles; local farmers markets are booming, hypermarkets are downsizing and personal shopping experiences are valued.

Is it now time for High Streets to come back into fashion?

The Local Data Company published this week that there has been a drop in store vacancy rates in the UK as a whole, but there is a huge disparity between the north and the south with the north east having more than twice the number empty stores as London.

There are countless reasons why retailers close down, rates and rents play some part, poor management and lack of agility to respond to competition play a part too, but the squeeze in margins that online retailers have placed upon bricks and mortar stores have mean that rates and lack of agility are compromised because of lack of cash, caused by weak margins. And so the vicious cycle started.

And yet, we read this week that Amazon is putting together a deal to buy Radioshack in the US because it wants to showroom its products to the consumer, in stores, on High Streets.

John Lewis, which is held as a success model of omni-channel retailing in the UK, credit some of the success of their online offer to the stores themselves, claiming that customers wouldn’t buy online without having first checked out their purchase in store first. There is more to it than that, not least of which the ‘never knowingly undersold’ promise, but for John Lewis the model works.

Made.com opened another UK store in London, believing that online can be significantly supported by a store and presumably forecasting that the costs associated with running a store are more than offset by the benefit.

And so the cycle of retailing looks to take another turn. Amazon and Made.com are leading and may not succeed but where one leads, others follow, learning as they go and subtlety modifying the model each time. Opening a showroom is not the same as opening a chain, but fashion goes in cycles and who would have predicted 10 years ago that hypermarkets would be overshadowed by convenience store expansions.


Retail Remedy provides bespoke, results-focused consultancy for retailers globally, from established brands to high-growth start-ups. Get in touch.