The purpose of this report is to assess the present procedures executed by Morrisons. These methodologies will be investigated utilizing various strategic analysis tools.
Morrison’s main objective is to make sure the organisation provides great food, offer remarkable service and being more efficient in their company’s strategy (Morrisons, 2017). Therefore, having their own manufacturing facility helps the organisation produce good quality food and distribute fresh food to their stores faster.
Morrisons is not the same as any other grocery stores as they have their own manufacturing facility where they produce fresh food in their stores. The organisation transports to their stores utilizing their own distribution conveniences. So their strategy is straightforward and has been expanding over the last few years, the organisation has been offering great value and fresh food than any other grocery stores.
Morrisons took the decision a few years ago to have their own abattoir so they can kill and get their meat directly to the store knowing they are not going to have horse meat (Steiner, 2013). In 2017, Tesco’s Tukey was ‘rotten’ and customers were refunded their money back (ITV News, 2017), they had terrible publicity. This is a huge advantage for Morrisons because they are a trusted supplier and have their own value chain, consumers will know they are getting proper turkey and beef.
Furthermore, Morrisons are attempting to open new stores locally and in town centres. From January 2018, Morrisons will supply 1,300 McColl’s shops and 350 newsagents nationally as the organisation has signed a £1 billion wholesale supply deal with convenience store chain with McColl’s (Mintel, 2017).
Figure 1 shows how Morrisons have been progressing over the last 5 years. In 2014, their revenue for the year is £17, 680, 00. However, in 2017 their revenue has decreased to £16, 317, 00. The reason behind this may be because of the Brexit vote last year as it affected many food retailers due to the weak pound (BBC News, 2017).
Figure 1- demonstrates the financial statement in the last five years revenue for Morrisons (Mintel, 2017).
In February 2017, Morrisons revealed its first womenswear collection with their own brand name Nutmeg women’s. It included women’s clothing such as jeans, vests, jackets, with a value starting at £3. In the UK, shopping for clothing, footwear and accessories are the third most common non-food products to be purchased by customers in grocery stores, with an increase of 48% of purchased clothing products in the year 2017 (Mintel, 2017).
The organisation has obtained six HMV stores from the ‘music retailers, administrator, and 49 Blockbuster store’ throughout the UK. Also, Morrisons have obtained 7 former Jessops shops, all together to make up for lost time with rivals i.e. Tesco and Sainsbury’s (Mercer, 2013). In the same article, Mercer provides further information “Morrisons offering its employees a GBP 500, finder fee if they find convenience properties for Morrison that are subsequently opened”. The main purpose for this was for Morrisons M convenient store to be available in the market. The organisation has to make sure they provide the right products to their customers at all times. Also, having vertically coordinated inventory network intends to get food into stores rapidly which helps the organisation achieve their strategy by providing quicker service to their customers.
James (2009), in his article highlights a variety of different approaches that Morrisons are taking, these approaches are summarised as follows. He mainly states that Morrisons is doing very well because they have developed their company strategy by engaging more with customers by offering fresh products. Being more involved with customers is helping the organisation compete, they are overtaking customers and market share, leaving their competitors stunned by their outstanding performance over the last few years. James (2009) also states that Morrisons reported a 13pc increase in pre-tax profit to £636m for the year to February 1. Sales rose by 12pc to £14.5bn, while like-for-like sales, which strips out the effect of new stores, rose by 7.9pc. The shares rose 9¾ to 255½p.This is a huge advantage for Morrisons as this has helped the organisation open more stores in the UK and remain the top ‘four supermarkets’.
Morrisons online uses the Ocado (supermarket company) framework to fulfil fundamental supply orders, with Ocado giving space inside its CFCs (customer fulfilment centre) to Morrisons. This is important to Morrisons as it enables the organisation to scale its online operations speedier and coordinate its opponents’ close national coverage (Mintel, 2017). (Refer to appendix 1).
Figure 2 shows Morrisons is in the bottom for online coverage, it doesn’t show CFC (Customer Fulfilment Centre) for Morrisons (Mintel, 2017). Due to this, it has encouraged the organisation to agree to work with Ocado network so it helps Morrisons progress in their online shopping (Morrisons, 2017).
Figure 2 – demonstrates Morrisons online fulfilment centre (Mintel, 2017).
BBC News (2010) states that in the year 2008-2010, 577 supermarket stores were open; as the big four supermarkets ‘Tesco, ASDA, Sainsbury’s and Morrisons’. Morrisons only opened 41 stores compared to Tesco’s as they opened 392 stores. This is a huge disadvantage for Morrisons because this shows Tesco’s are always one step ahead of them; therefore, this may affect Morrison’s strategy.
Figure 3. Demonstrates how many stores Morrisons have opened from 2012-2017 (Mintel, 2017).
Porters Generic Strategies
Price differentiation and efficiency is the right strategy for Morrisons to focus on. In the last 5 years, low-cost leadership in sustenance retail segment clearly picked up by LIDL and ALDI, Tesco was attempting to get in that position yet Morrison was known for its own differentiation system by offering new nourishment and in-house arranged sustenance and concurring review costs was higher than average (Promise, 2009).
The recent years have seen the most noticeably bad impacts of the recession, therefore organisations were required to invent and create methodologies which would concentrate on holding existing clients while drawing in new clients all the while. WM Morrison Supermarkets plc is an example of overcoming adversity in the midst of all the vast scale corporate disappointment and has figured out how to stay productive while its rival’s and organisations, as a rule, have battled an incredible arrangement. (Appendix 2).
Bowman’s strategy clock
Another tool that can be used to analyse strategies is Bowman’s strategy clock. For Morrisons, the best position the company should consider within the strategy is the 5th route which focuses on the differentiation of the products. They should also consider 2nd route in the strategy which indicates bringing down the cost. Morrison’s concern is that the organization has turned out to be static and there is no development in the recent market share, therefore the organisation needs to expand their market share in the industry, and the product differentiation of the overall industry which is extremely essential in order to help bring the change within a product range (Lee, 2008). This change will attract clients and increase income by marketing (appendix 2).
Figure 4. Demonstrates that Tesco is the leading supermarket ahead of its rival Sainsbury’s and Morrisons is the fourth largest leading retailer (Mintel, 2017).
On behalf of Morrisons, the ideal approach to evaluating the corporate level is by analysing through the Ansoff Matrix (1957) figure 5, the reason for behind this because the matrix helps the organisation develop its products and different markets. Morrisons can do this by growing overseas, interesting new consumers by promoting and developing their convenience shops. Morrisons can increase their market share by the conventional shop, where they can sell products at a low price than the supermarkets. This will help Morrisons build a strong brand image and put a good impact on the grocery retailer (appendix 3).
From looking at the grocery retailing sector in the UK shows that customers are looking for more comfort in all parts of their grocery spending habit. This is the explanation behind such an immense move in shopping routines in the course of the last 5-6 years. The pattern of purchasing when required has turned out to be progressively famous particularly among more youthful buyers (Mintel, 2016).
Figure 5. Ansoff Matrix. Source: Ansoff (1957), adapted from Lynch (2009)
Due to shopping habits in the UK, a recent survey shows that over 81% of consumers look at products in the store and compare the best prices online, and 52 % of consumers use the same retailer all the time (Statista, 2016).
Figure 6. Demonstrates the shopping habits in the UK (Statista, 2016)
Consistency with SWOT
Morrisons supply chain is the key strengths of the market analyst. Morrisons have also remained one of the ‘big 4′ supermarkets in the UK, this is a huge opportunity for Morrisons because once UK leaves EU; it will allow Morrisons to expand in the wholesale market (appendix 4).
Morrisons’ market strategies that align with strengths and opportunities is the efficient supply chain and distribution network, the company owns 17 manufacturing sites and that’s what differentiates the company from competitors. Morrison’s baggiest strengths are the development of Fresh Food in the market which helps them have the highest growth rate. Providing good products at a competitive price in Morrisons is what helps the company succeed their strategy (Morrisons, 2009). In the SWOT analysis (appendix 4) one of the main opportunities for Morrisons is the change in shopping habits for the whole supermarket industry. The increase in demand in the UK for organic products is a huge opportunity for Morrisons to increase growth in their product label and worldwide. From the environmental factor in pestle analysis (appendix 5), which suggests that Morrisons reduces its carbon emissions by 12.8% over the past three years (Morrisons, 2017), which suggests that this strategy helps Morrisons reduce waste and stay sustainable in their business ideology (Mintel, 2017). Core competencies is a huge advantage for Morrisons as this helps their strategy focus on serving their customers better, they do this in many different ways such as providing vouchers and discounts.
The strategic goals for Morrisons are to construct on existing projects by creating innovative and funding models to meet their present and future needs. Morrison’s strategic objective is to make their organisation unique in the UK market, they do this by providing fresh food. Furthermore, in the technology factor (appendix 5) for online shopping industry, Morrisons have a medium risk due to an increase in the trend (Peston, 2014). The reason behind this is because Morrisons does not have their own online website, they work with Ocado to develop their online marketing strategy (Mintel, 2017). For Morrisons, stakeholders are needed when there is a development of the marketing strategy. The control of stakeholders can influence the failure as well as the success of an initiative; therefore it is important for Morrisons to communicate well with their stakeholders.
For Morrisons, having an online retail is an advantage for their business as this can be very easy and it also involves distributing the product as well as supply chain management. From the value chain analysis for Morrisons, it shows that having their own manufacturing facilities they are able to provide fresh food to their consumers at all times. The third primary activity ‘outbound logistics’ suggests that Morrisons currently has the fastest delivery speed from warehouse to shop, 18million cases are distributed to stores. This shows that Morrisons cut their carbon footprint as they reduce their travel distance (appendix 6).
Morrisons has opened up many convenience stores throughout the South in the UK since March 2013 (Orme-architecture.com, 2017), this is due to having in place the right resources and capabilities which has helped Morrison expand. Furthermore, the operation factor for Morrisons suggests that cost savings and freshness is a leading factor in Morrison’s current strategy (appendix 6). Providing good customer service and producing high-quality fresh food which Morrisons already do will help them further expand in the high street market and different areas such as service stations, this will make the strategy extremely feasible.
Morrisons is doing very well in their marketing strategy. However, one of the strategy Morrisons can improve is online retailer competence. Morrisons can do this by expanding their current service in partnerships with Ocado and deliver nationwide, while they sell groceries wholesale thorough Amazon (Rigby, 2016).
Another strategy Morrisons can develop on are non-food products, providing different types of products in their business will help the company expand. For instance, Morrisons can develop on electronics and more clothes, homeware, health and beauty, technology and gaming. This a great opportunity for Morrisons to increase more growth and compete against their competitors. In order to do this, Morrisons would need to construct extensions in their store and make extra space for non-food products. This strategy will meet customers’ needs and expectation from the company.
Morrison’s company strategy isn’t working very well because they are losing market share (Mintel, 2017). However, from looking at the Ansoff Matrix for Morisons, the company has developed market penetration by online shopping because they already have partnerships with Amazon and Ocado. Morrisons has taken full advantage of this and made their brand image stand out. Morrisons has also developed market development as they are developing and opening new stores in January 2018 (Mintel, 2017).