Morrisons is showing good growth in its expansion strategy. But could its confidence mean it steps up plans in other areas of the business?
Morrisons once again delivered a great set of results yesterday. While there were no major surprises in the Morrisons strategy, management are showing all the confident signs that there is much more to come.
Morrisons chief Marc Bolland talked about the plan to take the grocer “national to nationwide” and as part of that it is opening smaller stores. The grocer was always adamant it wouldn’t open convenience stores because they can’t deliver Morrisons’ famous ‘Market Street’ offer.
Market Street definitely sets Morrisons apart from the other grocers. The individual ‘shops’ including a butcher, baker and fishmonger, has helped Morrisons keep many of the AB shoppers that have tried out the grocer in the recession, trading down from the likes of Waitrose and Sainsbury’s.
So while Morrisons has not shrunk its format to the typical convenient store of its rivals – some 3,000 sq ft – it has created a design that allows it to operate in a store of 10,000 sq ft. In those stores – which are performing ahead of expectations – Morrisons has retained the butcher, baker and fishmonger.
The move means Morrisons will be able to fit into many more locations. Bolland always points out there are so many shoppers who have not been into Morrisons recently and do not have a store within a 15-minute drive time. The smaller format will mean it can reach out to these shoppers and encouragingly, Bolland also insists the customers to those stores are mostly doing a full shop.
The smaller stores will give Morrisons huge growth potential but that’s not the only thing on the cards. Previously Bolland dismissed the idea of online shopping and growing the non-food operation because he said the grocer is concentrating on being a food specialist and getting the stores in shape.
While this is still the case and the roll out of the smaller stores is part of this plan, he hinted that online will come when they can find the right model. He won’t be rushed into launching online but seemed more warm to the idea than he has before.
And with non-food, Bolland said Morrisons could easily open larger stores if it wanted so there would be enough space for the full food offer, and a larger non-food range. Again, he says he doesn’t want to do anything half-heartedly, but there are signs that he may well be planning a lot more than he lets on.
Morrisons may be the fourth grocer in the big four, but it is definitely one to watch.