Morrisons must sell suppliers a clear turnaround vision

We all have a soft spot for Morrisons. It’s been hard to watch the catastrophic share decline of this former big four bastion. It’s now set to become the sixth-largest supermarket, behind Aldi and Lidl, later this year.

Sir Ken Morrison is remembered by employees for his ‘retail is detail’ mantra and driving high in-store standards. The same is now demanded by Rami Baitiéh, Morrisons’s latest CEO, who is making waves a few months into the role.

Not keen on being lectured about unrelenting focus on in-store basics, some managers have left the business. Interestingly, store operations have welcomed this badly needed renewed focus on the basics.

In-store, Morrisons has suffered from rampant out-of-stocks, haphazard listings and incoherent promotions. It’s been a classic case of exploding supplier activity to access commercial income investments, in an attempt to hide a trading profit hole. It’s also a vicious circle that compromises the shopper experience and drives them away in even larger numbers.

It is baffling how Morrisons has failed to capitalise on being supplied by its own farms and production facilities, and Baitiéh needs to leverage this main point of difference in the turnaround.

Let’s hope the issues facing the retailer aren’t compounded by GSCOP breaches or financial irregularities like Tesco in 2013/14. Back then, Dave Lewis and Jason Tarry pulled Tesco out of this same trap, but can Baitiéh do the same for Morrisons? He hasn’t got long, and under the weight of huge debts, there is pressure to sell assets (though he has already declared that is not the intention). 

To avoid selling off assets, Morrisons will need to use suppliers’ money yet again – but stop the random activity and introduce a coherent in-store strategy. To break out of this retail death spiral, the next stage requires more strategy from Morrisons and serious judgement from suppliers.

Baitiéh has turned to Darren Blackhurst, another retail personality with a combative ‘trading ninja’ reputation, so suppliers are naturally guarded. But the new team cannot stop the rot with mantras, lectures and supplier pressure. Morrisons now needs to sell suppliers a clear vision, focused on shopper experience and leveraging its point of difference, before it comes looking for supplier investment. The recent management exodus suggests they haven’t seen any evidence of a new strategy as yet.

Behind his war rhetoric, Blackhurst has always taken the approach of ‘help me and I can make your business rock’. If done within a believable turnaround plan, it just might work.

Suppliers should listen carefully, as the change will require a leap of faith at a vulnerable time for them. They should not commit any level of investment without being very clear on the deliverables. Importantly, they should evaluate what’s on offer, and if they like what they hear from the new team, then category by category go for it.

The first movers to invest in Tesco in 2015/6 got many advantages and high returns, but suppliers have to trust the turnaround plan to look beyond the short term.