Morrisons reported yet another declining quarter of like-for-like sales this morning, its fifth back-to-back decline excluding fuel and is continuing to lose customers to rivals.
Morrisons reported yet another declining quarter of like-for-like sales this morning, its fifth back-to-back decline excluding fuel. The grocer, which admittedly has its strengths in a vertically integrated supply chain, is continuing to lose customers to rivals.
While much has been said about the Bradford-based grocer’s lack of an online offer and limited exposure to the booming convenience channel, Morrisons is working towards improving its presence, with 80 pipeline convenience stores and ongoing talks with Ocado. However this alone is not going to stem the declining like-for-likes.
Competition in the grocery market over the past year has been intense. Retailers have pumped out the price message in order to attract shoppers on a tight budget and with high levels of inflation, there is no doubt that this message is an important one. However, as highlighted by Sainsbury’s chief executive Justin King just yesterday, if everyone shouts about price, the message is neutralised for consumers. If everyone says they are the cheapest, the only effective way to communicate to shoppers is through value for money and product quality.
Morrisons has talked about communicating its points of difference, its craft skills, vertical integration and fresh food focus. This is the right course to take, however it seems to have done very little in its first quarter of 2013/14. Dalton Philips talks about its Pick of the Street campaign which goes some way to communicating its quality credentials, but it is still essentially a price-based message. And the Payday Bonus, while innovative, does little to make Morrisons stand out from the pack.
When Dalton Philips first talked about communicating the grocer’s points of difference, those who follow the retailer were given a glimpse at what Morrisons is all about: quality food which is well sourced and at an affordable price. However so far, this important message has not been promoted well enough to those that matter, the shoppers leaving Morrisons for its rivals.
With Morrisons emerging relatively unscathed from the horsemeat scandal, this should have been a time for the retailer to capitalise on its strengths; instead, it appears to have been classed as just another grocer.
It is early days, just one quarter through the year, so all is not lost. But with consumer sentiment and the grocery retail landscape unlikely to change over the coming 12 months, Morrisons is going to have to work extremely hard in order to reverse its fortunes.
Andrew Stevens is a senior retail analyst at Verdict Research