Morrisons sales drop: there's work to be done

Like-for-like sales shrink by 1.8 per cent.

In the 13 weeks to 5 May 2013, Morrisons saw total sales rise by 0.6 per cent but like-for-like sales shrink by 1.8 per cent. While Morrisons has experienced an easing in LFL declines during Q1, the grocer’s performance serves to highlight that it has continued to underperform in a highly competitive market. Moreover, while its current strategic focuses are sensible, and have the potential to get Morrisons back on track in the medium-long term, they will inevitably take time to bear fruit.

With the UK food & grocery market increasingly being characterised by falling customer loyalty and low volume growth, which is in turn being met with heavy promotional activity among the main players, Morrisons has been forced to react. To this end, there has been a noticeable sharpening of promotional activity with the grocer building upon investment into innovative campaigns such as Payday Bonus, with the launch of its new Our Pick of the Street campaign – which focuses in particular on fresh products.

Elsewhere, it has been much keener in seeking to communicate its key differentiators. This period saw a greater focus on marketing extolling the virtues of Morrisons’ virtual integration strategy, via the medium of a high profile television campaign featuring family favourites Ant and Dec, complemented by full-page spots in newspapers. The benefits of its sourcing and distribution strategy will have resonated well with consumers amid the horsemeat scandal which has understanding eroded trust in grocery retailers. Indeed, Morrisons was one of the few grocers unaffected by the furore.

This period saw Morrisons make further progress across a number of areas which are key to its long term health. It remains on track to operating 100 M Local by year end having acquired a tranche of outlets from failed retailers such as Blockbuster and Jessops. Morrisons also plans to have implemented its new Fresh food concept across 40 per cent of its portfolio by the end of its financial year; further strengthening its credentials for quality and freshness. However, while it plans to have a full online food & grocery offer for 2014, the specifics remain unclear. Moreover, its high profile discussions with Ocado – which are likely to lead to Ocado providing technological expertise, as well possible use of one of its distribution centres – have yet to yield any results. 

Morrisons continues to be a soundly run retailer and many of its current investments – particularly in relation to online and convenience – are set to leave it significantly better positioned in the medium-to-long term. However, it will continue to face short term challenges as it plays catch up with rivals.  Moreover, while the grocer is displaying greater adeptness in communicating its key points of differentiation, there is still much work to be done around strengthening price perceptions.

Morrisons. Photograph: Getty Images

 Managing Director of Conlumino

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Nicola Sturgeon is betting on Brexit becoming real before autumn 2018

Second independence referendum plans have been delayed but not ruled out.

Three months after announcing plans for a second independence referendum, and 19 days after losing a third of her Scottish National Party MPs, Scotland’s First Minister Nicola Sturgeon booted the prospect of a second independence referendum into the heather. 

In a statement at Holyrood, Sturgeon said she felt her responsibility as First Minister “is to build as much unity and consensus as possible” and that she had consulted “a broad spectrum of voices” on independence.

She said she had noted a “commonality” among the views of the majority, who were neither strongly pro or anti-independence, but “worry about the uncertainty of Brexit and worry about the clarity of what it means”. Some “just want a break from making political decisions”.

This, she said had led her to the conclusion that there should be a referendum reset. Nevertheless: "It remains my view and the position of this government that at the end of this Brexit process the Scottish people should have a choice about the future of our country." 

This "choice", she suggested, was likely to be in autumn 2018 – the same time floated by SNP insiders before the initial announcement was made. 

The Scottish Lib Dem leader Willie Rennie responded: “The First Minister wishes to call a referendum at a time of her choosing. So absolutely nothing has changed." In fact, there is significance in the fact Sturgeon will no longer be pursuing the legislative process needed for a second referendum. Unlike Theresa May, say, she has not committed herself to a seemingly irreversable process.

Sturgeon’s demand for a second independence referendum was said to be partly the result of pressure from the more indy-happy wing of the party, including former First Minister Alex Salmond. The First Minister herself, whose constituency is in the former Labour stronghold of Glasgow, has been more cautious, and is keenly aware that the party can lose if it appears to be taking the electorate for granted. 

In her speech, she pledged to “put our shoulder to the wheel” in Brexit talks, and improve education and the NHS. Yet she could have ruled out a referendum altogether, and she did not. 

Sturgeon has framed this as a “choice” that is reasonable, given the uncertainties of Brexit. Yet as many of Scotland’s new Labour MPs can testify, opposition to independence on the doorstep is just as likely to come from a desire to concentrate on public services and strengthening a local community as it is attachment to a more abstract union. The SNP has now been in power for 10 years, and the fact it suffered losses in the 2017 general election reflects the perception that it is the party not only for independence, but also the party of government.

For all her talk of remaining in the single market, Sturgeon will be aware that it will be the bread-and-butter consequences of Brexit, like rising prices, and money redirected towards Northern Ireland, that will resonate on the doorstep. She will also be aware that roughly a third of SNP voters opted for Brexit

The general election result suggests discontent over local or devolved issues is currently overriding constitutional matters, whether UK-wide or across the EU. Now Brexit talks with a Tory-DUP government have started, this may change. But if it does not, Sturgeon will be heading for a collision with voter choice in the autumn of 2018. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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