Sir Kenneth Morrison CBE is one of the world’s greatest grocers. When he speaks, people listen. When he speaks at a Morrisons agm, as he did recently, expressing concerns about some recent developments there, the tremors could be called seismic in retail terms. Here is a man who is not only a brilliant retailer but one whose heart is within, between and around that supermarket’s aisles.

Developments at Morrisons have been a growing concern for some quarters. This time last year, when Morrisons was outperforming the pack, many would have been surprised that it would be ‘the laggard’ by mid-2012. The relative downturn in Morrisons’ performance seemed to take hold last autumn, and it has since migrated into outright poor trading in recent months.

The explanation is not totally clear to us but it is worrying. We sense that there are two processes. Firstly, external market forces. There is no doubt that the UK consumer is in a horrible place, reflected in unprecedented weakness in industry volumes. Also, God seems to have it in for Britain with sustained dismal weather. Furthermore, Morrisons has been negatively affected by a Netto-inspired revival in Asda, its closest competitor.

“Morrisons may be disenfranchising core value-based customers”

We also question whether Morrisons has compounded these wider pressures through its trading strategy and store development programme. It appears to be seeking different customers through a prompt move up the value chain in terms of proposition. In moving this way it may be disenfranchising core value-based customers, who may be trying Aldi and Asda as a result, but it is not yet attracting shoppers from the likes of Sainsbury’s and Tesco.

Our worries are compounded by the fact that Morrisons has converted nearly 15% of its space into its Fresh Format, many range and category reviews are in place across the estate and it is opening up yet more space. And Morrisons is losing share before we see what Tesco’s self-improvement yields. Finally, our worry lines deepen when we consider that Morrisons is one of Britain’s biggest food manufacturers, compounding potential margin misery. Sir Kenneth’s noteworthy observations suggest trouble may be ahead.