As 2004 unfolds, there is little doubt that one of the most dramatic changes to the retail landscape, beginning in August, will be the refit of large parts of the Safeway estate to become Morrisons.
So far, most of the media commentary has concentrated on the impact of price as Morrisons replaces the high-low pricing at Safeway with its own programme of price cuts. The consensus is that UK grocery trading will get more competitive as Morrisons implements reductions on more than 800 lines in Safeway stores.
However, there is another aspect to the takeover which seems to have generated much less comment and that is the impact of Morrisons-style ranging and display - in particular Market Street. Most superstores these days operate a limited amount of counter service in areas such as bakery, deli and fresh fish. With Market Street, Morrisons takes this one step further and offers the shopper a range of individual ‘shops’ upon entry to the store, covering areas such as tobacco, fresh fish, butcher, deli, bakery, hot pies, pizza, salads and sandwiches.
There is liberal use of stained glass, leaded lights and varnished wood with the legend ‘Wm Morrison Provisions Merchant’ much in evidence. It would be a mistake to dismiss this as a Disneyesque take on Victoriana. It is proving very successful and a striking demonstration of this is provided by TNS Superpanel data.
A simple measure that can be used to assess the effectiveness of a category in store is conversion. This can be defined as the percentage of trips to the store that are converted to purchases in a particular category. Thus for the 52 weeks ending February 29 2004, 73.4% of the trips to Morrisons contained purchases from the fruit and vegetables category.
In isolation this is unsurprising - fruit and vegetables will appear on the majority of shopping lists. However, compared with the results produced by rival Asda, it is highly revealing. Both Asda and Morrisons are largely superstore estates with similar shopper demographics and spend patterns.
The equivalent fruit and vegetable conversion for Asda is 65% over the same period. So, for every 100 trips to each retailer, on average 8.4 more contain a fruit and vegetable purchase in Morrisons than in Asda. Repeating this comparison for the 233 markets that comprise the Superpanel Retailer Share Track service, and selecting the top 10 markets where Morrisons enjoys higher conversions than Asda, yields the chart (left) where the 8.4% Morrisons fruit and vegetable conversion advantage is shown with the other nine winners.
Seven of these top 10 categories feature in the Market Street format (marked in bold type), which illustrates the merchandising strength inherent in Market Street. And it is another aspect of the forthcoming Morrisons impact on the competition that goes well beyond price.
There have been a few sniffy comments in the press questioning whether Morrisons will prove a hit with southerners and their allegedly more sophisticated tastes. However, a quick visit to their stores in Chingford and Enfield will not find them short of customers.
Moreover, Market Street evokes rose-tinted memories of shopping in the ‘good old days’ with simple displays of packaging-free fresh foods and counter service. The impression is of freshness, quality and good honest value that transcend class and regional prejudices.
Morrisons already enjoys high customer loyalty. If this is maintained as the trading format is rolled out across the Safeway estate, then the grocery trade will be faced with formidable competition where price is only one weapon in the arsenal.