Dr David Arnott said: “Morrisons’ ‘planned reset’ clearly affects jobs and shareholder returns, but is it an indicator of the demise of the brand and the company?
Very unlikely.
We have yet to see the results and plans of the other major players and it is interesting to note that only two months ago, Tesco’s announcement of similar moves, with cuts of more than £250 million, overhead reduction of 30 per cent, shelving of the opening of 49 very large stores and the closure of 43 stores, resulted in a 13 per cent rise in share value.
Fourth largest player
“Morrisons is currently the fourth largest player in the UK’s £175 billion per annum food and drink retailing industry, but increasingly shoppers are going to convenience stores and online to get their groceries. These are the two areas Morrisons have been slow to exploit, but both are being addressed in its ‘resetting’ strategy. Already 20 per cent of adults currently do all or most of their grocery shopping online. The large, out-of-town centre, shopping mall grocery outlet is likely to feel pressure, especially from the discounters.
Grocery purchaser’s buying behaviour
The traditional supermarkets are likely to suffer unless they truly understand the grocery purchaser’s buying behaviour. And here another technological challenge enters the mix – big data – giving an advantage to the bigger stores with more resources to invest and exploit the opportunities this provides.
“Whether Morrisons’ sales and profits can be reinvigorated will depend heavily on the success of the ‘resetting’ steps already taken. The future will require the formulation and implementation of strategic marketing plans based on detailed knowledge and understanding of their market and the grocery customer. But then they have introduced new blood, with proven track records, into their senior management team within the last month, so watch this space.”
David Arnott, of Warwick Business School, is Principal Teaching Fellow, and researches supermarkets.