As peak trading figures have rolled out over the past week, we have seen a picture of positivity for grocers, says Ben Latham, director of digital strategy at Summit – but what are the priorities ahead for Morrisons?
Tesco’s boss argued that the death of the hypermarket had been prematurely declared as the results rolled in. When Morrisons’ like-for-like sales rose 0.2% in the nine weeks to January 3, its shares rose almost 9%.
However, it was the first time the grocer had notched up sales growth in more than four years: arguably the sentiment of both the City and the media has been overzealous.
Likewise, many praised Morrisons’ startling 100% online sales increase. However, this is unlikely to have a substantial value as the retailer was late to the ecommerce party, launching online in 2014. Ocado launched 14 years earlier in 2000, as did Tesco.com.
With Aldi and Lidl staking their ground in-store, the grocery retail market has changed considerably in recent years. As Lidl launches online sometime this year, and this could have a huge impact on the figures that Morrisons see this time next year.
As chief executive David Potts said, there’s still “much more to do” for Morrisons. But how exactly can the retailer take its online offering to the next level?
Morrisons’ first priority should be to focus on its strengths. It is imperative that the supermarket makes the most of its points of differentiation.
The first thing that sets it apart from its competitors Aldi and Lidl is its vast range of foods which are sold at a lower price point than other more luxury supermarket. From Nigella’s favourite Thai curry paste Mae Ploy, to Japanese Kimchi that you might expect to find in the far corner of a specialist Asian store, Morrisons gives middle class Waitrose a run for its money.
To take this to the next level, and appeal to the broader online market, the retailer needs to look to promote this not only through marketing messages, but also bring the products to shoppers’ attention online. At the time of writing, the products that are profiled most overtly are washing powder, coffee and pizza – all products that are easily available at these rivals. The site also has tabs for its Cellar and Home and Entertainment offering – but nothing for its far ranging world foods to differentiate from the discount retailers.
Secondly, the movement into non-grocery could benefit the retailer, particularly as it looks to grow its online presence. Morrisons can’t make the likes of Amazon go away but it can get competitive with its ability to showcase products in store and online. Plus, a movement into non-grocery allows the retailer to downsize and use its space more creatively.
The third proposition that the grocer offers to the consumer is its emphasis on fresh food, taking advantage of the economies it can achieve from having its own manufacturing facilities, rather than relying on external suppliers. Its advertising and in-store offering highlights its position as the local supermarket, with greengrocers, fishmongers and butchers on hand to offer advice to customers.
Harnessing the knowledge of its experts to promote local produce in-store is something that can set Morrisons apart from its discount rivals.
Online however, this is difficult to translate. Exploring Morrisons.co.uk, shoppers are presented with a “Market Street” tab, which is actually home to all food on offer, from ready meals to mini rolls. To set itself apart, Morrisons needs to consider how to take its more personal offering online. Realistically, shoppers do want a simple and streamlined process, but they aren’t looking to buy the same products week in week out, and want both inspiration and advice for the week ahead.
In this disrupted and competitive market, every day is a battle – and not just for Morrisons. While consumers are shopping for groceries both online and offline, investment in both will be vital for success. This is particularly true in a year when Sainsbury’s may widen its online offering as it swoops to buy Home Retail, the owner of Argos – in a deal that could see the supermarket speed up deliveries and widen its range of non-grocery offerings.