As the Morrisons board begins its search for a successor to Marc Bolland, Ronan Hegarty looks at the potential candidates and the prospects for the retailer
Disarray. That's how Marc Bolland's new employer Sir Stuart Rose described Morrisons when Bolland took the helm in September 2006. Three years on and Morrisons has been transformed, and all eyes now will be on the Dutchman and whether he can bring the same clarity of vision to the muddled customer profile and convoluted IT and supply chain of Marks & Sparks.
But what about Morrisons? Bolland's shoes are big ones to fill, so can Morrisons continue to flourish without him, or will the revival be thrown into reverse?
As the dust settles on the industry's biggest job move since Bolland joined Morrisons, two distinct schools of thought are emerging.
One is that Bolland's marketing-led strategy is now so well engrained, the existing team and new CEO whoever that might be will be more than capable of keeping the retailer moving forward. This is the line the retailer's chairman Sir Ian Gibson was sticking to on Thursday as Morrisons announced a 4.3% sales increase for the 13 weeks to 1 November. "We are grateful to Marc for what he has achieved over the past three years," said Gibson. "The management team is well equipped to deliver the strategy." Gibson hoped to be able to announce Bolland's successor early in 2010, he added.
The other take on a post-Bolland Morrisons is that the retailer has achieved the necessary turnaround but that fundamentally it is in the same position as Safeway was before it was taken over by Morrisons: a number four player in the market with limited organic growth potential.
Investors, it would seem, are in the second camp. After the news broke, shares at M&S soared 5.4% while Morrisons fell 5.1% and the resulting change in the two retailers' market capitalisation prompted the press to label Bolland the 'billion dollar man'.
It is also a view shared by some of the retailer's biggest customers.
"Morrisons is still very much the fourth of the big four retailers," says one major supplier. "It's been doing very well but it's not clear where it goes next strategically. Bolland's successor will have to make big decisions fast."
Turning a business around is one thing, maintaining growth after that is another, warns former BRC director general and Safeway executive Kevin Hawkins. "It's had a good ride for the past couple of years and this has been helped by having a strong price position in the recession," he says. "But when the economy recovers and people have more discretionary spend it will face a different challenge."
Bolland's strategy has been based on Morrisons sticking to its strengths, with a focus on food, particularly fresh, coupled with clever marketing.
And Morrisons continues to leave the pack, with 8.5% sales growth, according to the latest 12 weeks to 2 November [TNS]. A strong performance in its new smaller format supermarkets in the south east (The Grocer, 7 November), and a new DC in Sittingbourne also suggested that Morrisons could continue to develop simply on the back of taking its food-based offer to a wider audience. But most observers feel that for Morrisons to go to the next level it has to develop a viable non-food offer and start selling groceries online.
Rivals have also developed online and catalogue businesses for non-food again leaving Morrisons behind.
Earlier this year The Grocer broke the news that Morrisons was considering a move into online groceries, but the retailer denied the story, with Bolland adamant it would not enter this market unless it was certain it could make money. It is still unclear how much the other major grocery retailers are making from their online operations.
But for now long it can continue to deny its customers an online service is a moot point, and it may be tempting for the board to look for this kind of experience when choosing its next leader. Hawkins argues this should not be a priority. "Morrisons still needs a good solid grocer in charge," he says.
Grocery should be the key criterion when looking at internal candidates. The most highly fancied is probably FD Richard Pennycook. Asked this week if he was interested in the role, Pennycook refused to comment. It is understood that Pennycook along with group retail director Mark Gunter will be running the show until a replacement is found. Gunter was tipped for the job before Bolland and it is hard to see what would have changed since then, says one industry expert. "Bolland clearly did a very good job of professionalising Morrisons' management and systems. His departure is a blow, they'll be gutted. Whether they can get someone of his calibre as a replacement isn't clear," she says.
A host of names from all of Morrisons' rivals are also being tipped for the role. Those in the frame so far include Asda's Darren Blackhurst, Andy Clarke, and Judith McKenna, as well as current Wal-Mart Canada CEO David Cheesewright; Tesco's Richard Brasher, Colin Holmes and Tim Mason; and Waitrose's Richard Hodgson. Ex-Aldi boss Paul Foley and former Somerfield MD Paul Mason may also throw their hats in the ring.
In the board's favour is Morrisons' track record on appointments, says one former employee. Bolland was a bolt from the blue when he was chosen back in 2006 ahead of many of the people listed above. With everyone expecting a retailer, Morrisons plumped for a supplier with bags of marketing experience, who was able to push the brand at a time when it was struggling to win over Safeway shoppers in its south-east heartland.
"It was a shock at the time," says the former Morrisons man. "But it was clearly a good pick and the same people who made that choice will be making this one now." He also agrees with Gibson that the existing team in Bradford is capable of seeing out any storm caused by Bolland's defection.
"It's a world-class retailer and is in a great place for the future," he argues. "Bolland was quite rightly praised for what he achieved but it was really a massive team effort."
What will come as a comfort to Morrisons is that Bolland is unlikely to tap up the company's senior staff to take with him to M&S.
"He didn't bring anyone from Heineken to Morrisons so I don't see why he would take anyone from Morrisons," says the former Morrisons employee. "He is very focused on creating a strategy that everyone can buy into rather than relying on key people."
Bolland's original appointment and his ability to work effectively with a domineering chairman in Sir Ken Morrison marked a sea-change at the retailer what happens next is sure to be equally fascinating.
Sales up 4% as Morrisons begins hunt for new Bolland (19 November 2009)
Morrisons’ Bolland to take M&S hot seat (18 November 2009)