Things are starting to look up for Morrisons, says Ronan Hegarty

This week came the first signs that things are looking up for the beleaguered Morrisons as it reported like-for-like sales excluding fuel up 2.6% for the six months to July 24 and sales at its converted stores up an impressive 10.9%.
The retailer remains confident that it will have completed the conversion of the Safeway estate by the end of November. And although no one at Morrisons is kidding themselves that it is going to be an easy ride from there on in, many are now tentatively looking forward to a return to the day-to-day business of running a grocery business - store operations director Mark Gunter, for one.
“I am very excited by the prospect of getting back to normality, if you can call it that, and am positive about what we can deliver,” he says in an exclusive interview with The Grocer. But, he admits, the integration has proved more difficult than Morrisons had expected.
Since the takeover last March, Morrisons’ competitors have done all they can to capitalise on their rival’s temporary weaknesses. On a local level, competing stores have timed promotions and voucher schemes to coincide with the opening of converted stores. Nationally, perhaps the biggest challenge has come from Sainsbury. Justin King’s efforts to bring Sainsbury more into line with its rivals on price as well as ramping up its promotional activity has pushed it right into the heart of Morrisons’ traditional territory.
Gunter, however, is unfazed. He says that it was natural for them to try and capitalise while Morrisons’ attentions were elsewhere and is confident that the retailer will be able claw back lost ground.
“I don’t think we’ve done too badly so far,” he says. “The task of converting the Safeway
stores has been massive. It should have taken three years, but we are trying to do it in 15 months. If we can do all this and still deliver for our customers, then imagine what we can do when we can focus entirely on retailing.”
Morrisons blamed its “lumpy” finances chiefly on having to continue initially with two separate operating systems. Admissions like this, along with a string of profit warnings, left the city decidedly jumpy and the situation wasn’t helped when in June Morrisons put this year’s forecast profits at anything from £50m to £150m, a far cry from analysts’ forecasts of £225m to £275m.
Integrating the two retailers’ catalogues and ordering systems has been a mammoth task and Gunter claims the whole job was made harder because of issues with the much-vaunted Safeway ordering system.
Before the takeover, Safeway’s technology was widely considered to be state of the art and Gunter admits that he was as keen as anyone to get his hands on it.
“I believed the hype about the IT system myself. However, it quickly became clear that it would not stand up to integration,” he says.
The entire is estate is now operating Morrisons’ ordering pad system, which he says may sound antiquated but is actually “very sophisticated”. It is also the system that has helped Morrisons pick up The Grocer 33 award for availability for the past three years running, he points out. This year, despite all the upheavals, Morrisons accumulated an impressive availability record of 98.3% compared with 97.5% at nearest rival Tesco.
“Morrisons hasn’t put any special focus on availability and it is not because of any special push. Quite simply we are obsessed with availability. Not only that but we are geared up so that each store is at its best when it is at its busiest,” Gunter insists.
It is the extension of the ordering pad system combined with this obsession with full shelves that Gunter believes is crucial to delivering the sort of offer that consumers are looking for right across the estate.
He also believes that consumers will take to Morrisons’ retailing style even in areas where it has no heritage. “People are always asking me why I am so confident that this will work and for me it is simple. When we convert a store we know exactly what we are creating. We are building Morrisons stores.”
After 37 years of uninterrupted growth before the Safeway deal, Gunter feels justified in his faith in Morrisons’ retailing style, which focuses on plenty of in-store theatre and staff/shopper interaction.
“We have invested heavily in our Market Street format, which involves getting a lot of staff behind counters, interacting with customers and making sure that everyone is served quickly and efficiently. This sets us apart and creates a lively buzz around the store,” he says.
Looking ahead, Gunter believes a key factor in ensuring success at Morrisons is giving ownership back to the management. “Safeway had a good team of retailers; we are encouraging them to get back to doing just that: retailing,” he says. “The emphasis we have is all about selling.”