With Lidl closing in, Morrisons is undertaking a range reset, and changing its loyalty and promo strategy – while trying to pay down its £1bn debt
Just over two years since turnaround specialist Rami Baitiéh became Morrisons CEO, his revival plan appears to be stalling.
Despite entering 2025 on the back of its strongest quarterly performance for four years, a steadily declining market share leaves it within a hair’s breadth of being overtaken by Lidl as the UK’s fifth-largest supermarket overall (see box, below). In food & drink market share, Lidl was ahead of Morrisons in the 12 months to July.
While it’s yet to show in Morrisons’ performance, it would be wrong to think there hasn’t been significant change, however – not least under new group trading director Andrew Staniland.
Staniland was brought back from Iceland in February, having previously been a buyer at Morrisons from 2012 to 2016. He is now leading a reset of its range and commercial strategy.
So, what is he doing? And can he breathe life into Morrisons?
One of his first moves was an overhaul of the trading team. It saw the creation of 10 new roles, including three new directors, though The Grocer understands a number of category directors have left in recent weeks.
Industry sources say the restructure is a “sensible” way to remove duplication and improve category focus, with the aim of getting teams shipshape to push ahead with a strategy dubbed ‘Morrisons Magic’.
Icelandification
That strategy has also focused on sharpening Morrisons’ range. After stripping out 2,500 SKUs, the most eye-catching element has been the ‘Icelandification’ of its NPD programme, as Staniland has dusted off the licensed playbook he pioneered at the frozen food discounter.
In total it’s added 500 lines across key categories, including an enhanced world foods offer and an increased focus on fresh lines, leading to a suite of new dine-in meal deals.
Modernising Morrisons’ Market Street has also been a key strand of the plan. The format is still seen internally – and externally – as Morrisons’ key point of difference, but counters are costly and inefficient to run.
The 70 least profitable Fish and meat counters have been closed (alongside 52 cafés, 17 c-stores and 13 florists). Morrisons has been giving the remaining ones a premium, farm shop-inspired revamp. It includes more simplified pre-packed cuts of meat and fish, with an emphasis on “value added” lines, such as marinated and ready-to-cook products. Morrisons has also brought back its Fish Friday and Steak Saturday offers – with a 20% discount for More Card holders.
“Market Street is a real point of difference, but not easy to effectively execute to both shopper and shareholder advantage,” says Shore Capital’s Clive Black.
On price, Morrisons has been sharpening its pencil. In September it announced promotional price cuts across 600 “key volume lines”. That’s followed a gradual dialing back on loyalty-price More Card promotions: as The Grocer revealed last week they’ve fallen 57% in the past year.
Instead, Morrisons has significantly stepped up the number of universal promotions from 5,043 promotions [4 November 2024] to 6,348, while doubling down on multibuys across its core lines. In the first half of the year, multibuys steadily increased from around 2,400 to as high as 3,534 at its June peak, according to The Grocer’s analysis of Assosia data. The total number of deals has not dropped below 3,135 since.
The multibuys have been complemented by a much simpler approach to merchandising, with more prominent aisle-end promotions. “You’ve definitely got a lot more focus coming in,” says Sean Field, a former Tesco and Asda buyer and now founder of Beyond The Field consulting. “There was so much mixed messaging before.”
It remains early days, but the strategy is yet to drive any significant shift in volumes. Sales grew well below inflation at just 1.7% during the 12 weeks to 5 October, according to Worldpanel by Numerator’s latest market share data.
Price competitiveness will be a factor in the face of a determined Asda, not to mention Aldi and Lidl, and with its loyalty programme no match for Tesco and Sainsbury’s.
During the current Grocer 33 year, which began in July, Morrisons is the only retailer bar Waitrose in the regular price comparison survey lineup that has yet to deliver a cheapest basket. Its last win on price was on 27 June.
The tendency to favour multibuys is unlikely to change that trend long term, says Ged Futter, director of The Retail Mind. “Multibuys are a way of justifying internally that Morrisons is offering value, but it makes the overall basket more expensive for the shopper as they have to buy more,” he says.
Price position is not the only issue holding Morrisons back. Baitiéh’s efforts to cut £1bn from its £3.6bn debt has sapped hours and investment from stores, leading to inconsistent standards and periods of poor availability over the past year. It was not helped by a major cyberattack on its forecasting software provider Blue Yonder just before Christmas.
AI and automation
A couple of recent tech investments may help, particularly the September rollout of a new AI-powered category management platform called MoreViu. Insiders say it has the potential to be “fairly transformational” for store standards.
Back-to-back Grocer 33 service and availability wins for Morrisons stores in Norwich and Letchworth at the start of October suggest it’s having an impact. Average availability in the 16 weeks to date has also has improved, up to 94.7% compared with 91.3% last year.
Morrisons will need to invest more hours in people and its processes, Field says. “It still doesn’t feel like there is enough care in the shops.”
That’s an accusation also levelled at Asda. On the other hand, the return of Rollback and Allan Leighton last November has had a more dramatic impact on pricing. Nonetheless, retail experts are optimistic there is time for Morrisons to address that.
“Staniland is trading Morrisons well and deserves credit, but everyone in grocery knows success is a marathon, not a sprint,” says Black.
It typically takes 12 to 18 months to see “green shoots”, says Field.
“If you rush in grocery you get found out quickly.”
No comments yet