New Morrisons chief executive Dalton Philips unveiled a raft of experimental initiatives last week as he started to outline his vision for the Bradford-based grocer.
The retailer is to try both convenience stores and online retailing next year, and has set up a series of trials to improve in-store execution and profitability.
The online trial will take place in one geographical region and is likely to involve more than one model of how to sell over the internet. Philips insisted he would only roll out online if the experiment proved it could be done profitably.
“We need to understand how to respond to this growing market,” he said, “but it has to be good for the business, otherwise you’ll end up subsidising it by charging your core customers more.”
In convenience, three trial stores will open in the first half of the next financial year. The shops, each measuring less than 3,000 sq ft, will focus on fresh food, and Philips said he was untroubled by the strong presence of Morrisons’ rivals in convenience. He said multiple retailers only represented 6% of the total number of convenience stores.
He also revealed that four stores had been designated “labs” - test laboratories where the retailer will try out new ways of doing things. A “space lab” will have its assortment reduced between 5% and 15%, which will free up space for additional categories.
These will potentially include non-food, although Philips stressed they could also be additional food or health and beauty ranges.
“The most profitable growth is the growth that comes through your existing network,” he said.
A “revitalise lab” will test new ways of bringing the store environment up to date; a “productivity lab” will aim to make store processes more efficient; while a “fresh lab” will examine how Morrisons can reinforce its reputation for fresh food. The latter test will operate alongside eight trials of different ways of merchandising fresh food that are already under way.
Explaining the lab concept, Philips said: “I’m not a risk-taker, but I’m passionate about experimentation.” He also reiterated Morrisons’ commitment to its own food production, which he sees as an area for further growth.
The unveiling of his plans came as Morrisons revealed growth in underlying pre-tax profits of 14% to £410m in the half-year to August 1, on sales up 9.1% to £8.1bn.
However, like-for-like growth, excluding fuel and VAT, slowed to 0.9%, compared with 7.8% in the same period last year.