So Morrisons is mulling over a bid for Iceland. Retail Week Knowledge Bank has just updated its profile of the UK’s fourth largest supermarket chain, analysing its performance in the first year under new chief executive Dalton Philips.
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Although it is too soon for him to have had a major impact it was, as he said, a “solid performance”, rather than spectacular. Sales growth was boosted by fuel while Morrisons still raised market share, although the year’s 0.9% like-for-like advance was its lowest on record and below Sainsbury’s equivalent, but better than Tesco’s, while margins were squeezed. 2011/12 has started better, though.
Under Philips’s direction a detailed plan is being implemented as he seeks to make his mark and take the business forward. The key components are further exploiting Morrisons’ unique fresh food preparation advantage, raising below-average own-label sales and freeing significant store space for new ranges.
But with 750 ex-Iceland stores also coming on board? OK, Morrisons already has trials under way for an attack on the convenience market with a unique c-store format boasting an extensive fresh and prepared food offer, on the back of recent success with its smaller supermarkets.
However, absorbing so many new stores in one hit would prove a huge management task - despite competition authorities presumably demanding some disposals - recalling the severe problems encountered by Morrisons’ last management but one in swallowing the original Safeway mouthful. Might it not be a case of out of the Safeway frying pan into the Iceland fire? Would not a piecemeal approach be more appropriate, cherry-picking and creating ripe opportunities along the way?
Maybe even taking some stores from Malcolm Walker’s table should he retain control of Iceland but decide some rationalisation of an extensive estate was required?