What is interesting about Morrisons is that it gets on with the job. While its competitors watch each other, and try to out manoeuvre, our impression of Morrisons is one of steering its own path and using its own strengths to grow the business rather than its competitor’s weaknesses.
The first half of 2017 has given Morrisons a solid set of financial results which are well earned. The short-term future looks to continue the same path with all the key indicators of a healthy business pointing the right way. For the longer term we also hold similar optimism.
The supply agreements that Morrisons has secured in the last year with Amazon, Ocado, and McColls has given the retailer a revenue stream that they intend to grow to more than £1bn. We see no reason why that won’t happen. McColls will be supplied with Safeway branded fresh, frozen and ambient produce from Morrisons for a period of exclusivity of one year. After that year Safeway could start to appear further afield.
Neither Morrisons nor McColls have written off the idea of Safeway standalone stores reappearing on our High Streets at some time in the future although this does seem a stretch. What seems more likely is supply agreements extending beyond McColls and the Safeway range being extended.
Morrisons have form for range development, picking up awards for Own-label Range of the Year at the Grocer Gold Awards, winning golds for Ready Meals and Frozen Desserts, wine and cheeses. To extend the Safeway own-label range is certainly to come.
Operationally, Morrisons are improving claiming 30% fewer gaps on shelf resulting from its automated ordering system. Fewer gaps, bigger baskets? Actually no, basket size is down. Morrisons are reporting more transactions though, the convenience, smaller shop more frequent visits shopper is apparent. To support this shopping mission Morrisons are installing more self-serve tills so that the core supermarket format still works.
To quote David Potts, “we are beginning to realise some of the opportunities that our unique team of food makers and shopkeepers can bring us,”. We think that is the key. Morrisons is focusing on its strengths, not the weaknesses of others. Strategically this is always the most successful way forward, particularly if coupled with strong leadership skills. Morrisons has a strong CEO but beyond that, the leadership mentality is permeating through the organisation and is delivering results.