Morrisons says listening to customers has been important in success of turnaround

Morrisons [IRDX RMOR] today announced rising sales and profits for the third year in a row – three years into a turnaround programme that has seen investment into its multichannel strategy.

The supermarket, a Leading retailer in IRUK Top500 research, reported sales of £17.3bn in the 53 weeks to February 4. That’s up by 5.8% in total, or 2.8% on a like-for-like basis, excluding fuel and VAT. Sales on a like-for-like basis, that strips out the effect of new store openings and closures, grew faster in its supermarkets (+0.9%) while online sales via Ocado’s Dordon customer fulfilment centre rose by 0.4%, and wholesale was 0.5% up. Pre-tax profits of £380m were 16.9% up last time, although £5m of this came in the 53rd week of its year, compared to a 52 week last year.

Chief executive David Potts said: “All parts of our progress so far have one common link: our colleagues. Listening to customers, responding, and improving the shopping trip are as important now as when we started this turnaround three years ago.”

Here’s what struck us about Morrisons’ multichannel strategy.

Differentiation through customer service
The retailer says it has differentiated itself a focus on good quality and great value, delivered by friendly colleagues and gaining high customer satisfaction stores. It says that time saved through productivity initiatives such as automated ordering is enabling staff to make a difference for customers. Local foods are a key focus, with more than 750 new products introduced over the last year.

The retailer has used new pick-from-store functionality developed by its technology and logistics partner Ocado to enable it to fulfil online orders in areas that are beyond the reach of Ocado’s Dordon CFC. So far, it has launched the new service in the North East, as well as in parts of East Anglia, Lincolnshire, and the Isle of Wight. Its Food to order service is available online and in-store and saw Christmas sales rise by more than 50%.

It supplies Amazon with groceries through a wholesale arrangement and over the year the Morrisons at Amazon service has expanded into London and Hertfordshire postcodes and into areas of Leeds, Birmingham and Manchester.

“Capability in technology and data is improving, but we still have substantial cost-saving opportunities in automated ordering, in-store administration, distribution, and procurement of goods not for resale,” it said in today’s statement.

Understanding customers
The supermarket has focused on understanding customers through channels including its More Card loyalty scheme. As a result it says it gains better insights into how to improve the shopping trips, and how to target its local offer.

Operations & logistics
Morrisons has worked with third-party suppliers including Doddle and Amazon to introduce parcel pick-up options. Doddle now has a presence in more than 160 branches, up from 50 at the end of the first half, while there are now Amazon lockers in more than 400 stores.

Job losses
As a result of simplifying its in-store structures, Morrisons is removing about 1,500 managers and creating 1,700 customer service roles in store. Frontline hourly salaries have risen to £8.70 over the year.

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Morrisons is one of the ‘big four’ British supermarket chains with headquartered in Bradford, West Yorkshire, England. Founded in 1899 by William Morrison, the company now has over 400 stores in the UK. (more…)

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