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The Morrison years: Sir Ken finally checks out

After 50 years at the helm of the company his father founded, chairman Sir Ken Morrison will step down this week. City editor Ros Snowdon charts the group's history from its origins as an egg and butter stall in Bradford and asks what the future holds.

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PROFILE

Everyone has their favourite Sir Ken Morrison story, but one of the best tells how he was spotted rooting inside the bins behind a Morrisons' store to establish whether fresh food was being wasted.

You can't imagine the sophisticated Justin King at Sainsbury's or the immaculate Stuart Rose at Marks & Spencer doing such a thing, but Sir Ken, 76, doesn't give a fig about what anyone else thinks of him.

He's been known to open packs of sandwiches at random to check for freshness – Sir Ken doesn't believe in statistics and IT projections, Morrisons' philosophy is based on common sense. When asked the secret of running a good supermarket, he once replied: "It's just taking money off people. And giving them something in return."

In the words of ex-Asda boss Allan Leighton, Sir Ken is one of the canniest retailers in the business. His star fell dramatically following the ill-fated 3.35bn takeover of Safeway four years ago, but he has recovered, and the company his father William established in 1899 is once again putting its rivals in the shade.

Sir Ken is one of Yorkshire's richest men, and his family fortune is estimated at 1.6bn. He was knighted in the New Year's Honours List in 2001 and lives in a magnificent French-style chateau in Myton-on-Swale, near Boroughbridge.

He left school at 18 and built up his father's egg and butter market stalls. When his father became ill, he returned from National Service in Germany to run the business rather than see it sold.

He was married and divorced as a young man and later remarried, but his second wife died of cancer 15 years ago. Sir Ken was said to have been devastated by her death.

His third wife is Lynne, a former lawyer who worked for the company's legal advisers and who is 30 years his junior. He has five children, three of whom are grown-up, and two young children with Lynne, now known as Lady Morrison.

Despite siring five children and running countless nappy promotions, he is yet to learn how to change a nappy.

"I'm not into women's lib and that sort of thing," he replied when asked if he'd ever dealt with that side of fatherhood.

As a female journalist in Yorkshire I've long become accustomed to being referred to as "love", but it's always fun to watch the latest national newspaper recruit recoil in horror at such familiarity.

To Sir Ken, it's just his way of dealing with people. Check-out girl or newspaper reporter, it's all the same to him. All he cares about is whether you're good at your job.

Sir Ken likes to encourage the view of himself as a bluff Northerner and hates people nosing into his personal life.

Asked about his wife's reaction to the news that he was launching a surprise bid for Safeway, he said: "Strangely enough, I didn't tell my wife at the beginning. What did she say when I did tell her? She said nothing, she said: 'Your tea's ready'."

Sir Ken is treated with respect by friends and rivals although he doesn't go in for the back-slapping and socialising enjoyed by some of his counterparts.

On Fridays he has fish and chips with new chief executive Marc Bolland in the staff canteen, and on Saturdays he has lunch in the Boroughbridge branch of Morrisons near his home.

Sir Ken has perfected the art of deflecting questions about his business methods with a quick one-liner, designed to stop you in your tracks. When asked by analysts how Morrisons' goes about its store-siting policy he grumpily replied: "Well, we get on a bus and we look for chimney pots."

"You do wonder sometimes whether he is playing with you," says one retail analyst. "When you ask him about the numbers, he says he doesn't know about that side of things and passes you on to the finance director."

When asked whether Morrisons would consider taking on management consultants to help with the integration of Safeway he gruffly replied: "If you don't know how to run your own business, it's time to give up isn't it?"

But there is one subject that he will give you a straight answer on and that's his beloved home city of Bradford. You can call Sir Ken what you like and he couldn't care less, but don't ever dismiss Bradford in his hearing.

Last year he opened the Born in Bradford project at Bradford Royal Infirmary, studying why babies born in Bradford are so prone to illness. As a Bradford baby himself, he is determined to give his home city his full support.

His efforts have earned him a place in the Yorkshire Hall of Fame, celebrating the region's greatest icons from the past and present. Sir Ken joins England cricket legend Fred Trueman, York-born actress Dame Judi Dench, Barnsley-born chatshow host Sir Michael Parkinson, fundraiser Jane Tomlinson and anti-slavery campaigner William Wilberforce.

After 10 years dealing with Sir Ken, I have to say I'll miss him. He is irascible, difficult, dismissive of the City, analysts and journalists, but he is genuine and he is also a damn fine retailer.

He got it horribly wrong with Safeway, but he has put it right. And in a world of chief executives who seem to come from the same management consultant/I've got an MBA/ shirt sleeves and no jacket mould, Sir Ken, with his Morrisons' branded tie, is a welcome relief.

Those closest to him say he is hardworking, honourable, utterly committed to Morrisons, hates criticism, and underneath the bluster he's quite shy. Maybe ex-Asda boss Allan Leighton sums him up best: "I used to go and have chats with him and I used to tell him everything and he didn't tell me anything.

"Nobody has a unique insight into Ken other than Ken."

Sir Ken Morrison

Age: 76.

Style: Bluff Northerner.

Business achievements: Took over the family business and is the longest-serving chairman of a blue chip company after 50 years at the helm.

Car driven: Land Rover.

Home: French-style chateau in Myton-on-Swale, near Ripon.

Marital status: Married with three grown-up children and two young children.

Best quote: "If in doubt, have a cup of tea."

Least likely to say: "Perhaps we should pay more money."Morrisons – The Rise, Fall and Resurrection

1899 – William Morrison, father of Sir Ken Morrison, opens an egg and butter stall in Bradford

1950s – William Morrison builds up a small chain of stores and market trading stalls

1956 – After ill health forces his retirement, William Morrison hands over to his only son, Ken, who first helped out on the stall at the age of five. Ken Morrison, having finished his national service, takes over as chairman and managing director. Sir Ken has no formal qualifications when he takes over, but says he learned about the business "through hard experience".

1958 – Morrisons opens its first self-service store, the forerunner to the modern superstores. The store has three checkouts and is the first in Bradford to offer self-service and to put prices on its products.

1961 – "Victoria", the company's first supermarket, opens in Bradford in 1961. The former cinema is converted into 5,000 sq ft of retail space selling fresh meat, fruit, vegetables and other provisions, with free parking available.

1967 – Morrisons becomes a public company in order to fund further growth. The share offer is 174 times over-subscribed as more than 80,000 investors try to purchase shares.

1971 – The group opens its new head office, warehouse and factory complex at Hilmore House in Bradford.

1978 – Morrisons buys Whelan Discount stores from former Blackburn Rovers footballer Dave Whelan and starts trading in Lancashire for the first time.

1980 – The group begins fresh food production with the launch of a new subsidiary called Farmers Boy, run from a purpose-built fresh food factory.

1988 – The first Morrisons purpose-built distribution centre opens in Wakefield.

1997 – A second distribution centre opens at Gadbrook Park in Cheshire and a new frozen food depot opens at the Wakefield centre.

1998 – Morrisons opens its first store in the south of England in Erith, Greater London.

1999 – Morrisons celebrates its centenary with the opening of its 100th store at Nelson.

2000 – Ken Morrison is awarded a Knighthood in the 2000 New Year's Honours List, for services to food retailing. The group opens its first Welsh store in Rhyl.

2001 – Following 35 years of record sales and profits since going public in 1967, Morrisons joins the FTSE 100 for the first time.

2004 – Morrisons buys Safeway for 3bn to become the UK's fourth biggest supermarket chain after Tesco, Sainsbury's and Asda. But the Safeway business is in far worse shape than Sir Ken had expected, and his far smaller organisation is unable to merge the two businesses successfully. Morrisons issues its first profits warning.

Shareholders force Sir Ken to take on non-executives for the first time, with the appointment of Duncan Davidson of Persimmon and David Jones of Next. Sir Ken had previously dismissed the idea of non-executives, saying he could get two check-out girls for the same cost.

2005 – Morrisons issues its fifth profits warning in less than a year. Duncan Davidson quits, leaving David Jones to push through change. Four new non-executive directors are appointed.

Distribution workers threaten to strike but call it off after Morrisons climbs down and agrees to introduce national wage bargaining.

Morrisons confesses it has lost its way following the Safeway takeover. The group announces chief executive Bob Stott is to step down.

2006 – Morrisons announces the first loss in its 107-year history and describes the performance as "wholly unacceptable". The group outlines a three year recovery plan. Marc Bolland of Heineken is appointed chief executive. Sir Ken says he will step down in 2008.

2007 – Morrisons announces that Sir Ian Gibson will take over from Sir Ken. Sir Ian takes over the role of deputy chairman and it is announced that Sir Ken will take on the honorary title of president when he steps down in 2008.

Marc Bolland launches a highly successful advertising campaign starring Denise Van Outen, Lulu and Alan Hansen.

Half year pre-tax profits nearly double to 266.3m.

2008 – Morrisons trounces its rivals in the Christmas supermarket battle as Southern shoppers ditch Sainsbury, Tesco and Marks & Spencer in favour of Morrisons. The group reports a 9.5 per cent increase in like-for-like sales in the six weeks to January 6, beating all forecasts.

Sir Ken achieves his goal of stepping down at a time when Morrisons is once again outperforming its rivals.THE COMPETITORS' VIEW OF SIR KEN

Andy Bond, Asda chief executive: "Sir Ken is one of a kind. True to his Yorkshire roots, he's been an inspiration to retailers both here and further afield. I've always found him to be a real gentleman. He'll be sorely missed. I'd personally like to wish him all the best for the future, and hope his retirement is as fulfilling as his career in retail has been."

Terry Leahy, Tesco chief executive: "Ken Morrison is unique in terms of the longevity of his management life and is always on peak form. He understands his customers very well and the thing you really notice about Morrisons stores is that they are in tune with their customers."

Allan Leighton, Royal Mail chairman and former Asda chief executive: "He knows what to do and has a great touch. He was the toughest competition we had to cope with and the business we admired the most. Part of our success was copying what Morrisons did. I wish I had half the skills that Ken's got. I was in awe of him. Sir Ken is tough, shrewd and ruthless. He is a great leader and businessman and you cannot say that about many people."

Mark Price, Waitrose managing director: "I met Ken at an industry function and he invited me to visit Morrisons' HQ. So I went up and spent two or three hours in Bradford. Ken told me about his first shop and the expansion into converted cinemas. He is a genuinely inspiring character, a decent chap and an honourable man with rock-solid values. He said he was looking forward to spending more time with his family and on his farm."

Lord Chris Haskins, former chairman of Hull-based Northern Foods, a supplier to Morrisons: "He is a great character, incredibly shrewd and a brilliant businessman. There is never a soft deal with Sir Ken, but he is fair and he is very loyal to his suppliers, particularly his Yorkshire suppliers."HOW THE SOUTH WAS WON OVER

Retailers are in for a tough 2008 as consumers cut spending. How will Morrisons size up against its rivals as the supermarkets go head to head for the weekly shop?

THIS time last year the jury was out on whether Morrisons' recovery could keep up steam. One year on it looks like it's still firmly on track, but no-one is under estimating how hard this year will be as supermarkets struggle to contain rising raw material costs and increasing fuel prices at a time when cash-strapped consumers are having to cope with higher mortgage repayments, escalating energy bills and a stagnant housing market.

So far Morrisons is doing better than anyone predicted. It trounced its rivals in the Christmas supermarket battle as Southern shoppers ditched Sainsbury, Tesco and Marks & Spencer in favour of the Bradford-based retailer.

Morrisons reported strong sales in its Yorkshire heartlands, but the best growth came from an increase in shoppers in the South who have taken a liking to Morrisons' strong fresh food offering and lower prices.

When Morrisons first took over Safeway, there were snide jokes about how Safeway shoppers had seen their smoked salmon and spinach, rocket and watercress salads replaced with hot pies straight out of the oven.

There is no doubt that Morrisons seriously misjudged its Safeway clientele, but under Marc Bolland, the group is getting back to what it does best – quality fresh food at affordable prices.

The group's Market Street concept, borrowed from the covered markets of West Yorkshire, has really taken off in the South. Shoppers pass through the store as if they were walking down an old-fashioned high street with areas laid out for the greengrocer, fishmonger, butchers, baker and general grocer.

"The butcher, the baker, they are all disappearing from the high street, the numbers are decreasing every year," says Bolland. "But there is a big consumer need for healthy food. At Market Street people can find a qualified butcher in store. That's not possible at any other supermarket, we're the only one."

Morrisons has its own abattoirs and last week it announced that it will only stock 100 per cent British fresh beef, a move welcomed by the National Farmers' Union. The group already sells only 100 per cent British fresh pork, lamb and poultry.

Market Street saw a 10 per cent increase in sales over the Christmas period, driven by the strong increase in customer numbers in the South.

On a recent visit to a London Morrisons, Bolland was accosted by a smart, well-spoken, middle-class, middle-aged customer who wanted to congratulate him on his "fantastic store". She added that she and her friends had ditched Sainsbury's and were now Morrisons converts.

When Bolland asked her if she had any complaints, she thought long and hard before suggesting that the organic wines could be more clearly labelled. Morrisons has come a long way from its Bradford egg and butter stall roots.

It is hard to compare the supermarkets' Christmas performance as they report on different periods, but Morrisons was by far the best performer with a 9.5 per cent increase in like-for-like sales in the six weeks to January 6, beating all forecasts and putting its rivals in the shade.

Leeds-based rival Asda came in second place with growth of about 5 per cent, while Sainsbury and Tesco were both below 4 per cent. Marks & Spencer reported a 2.2 per cent decline.

James Anstead at Citigroup says that Morrisons' sales figures have been extremely encouraging.

"It is further evidence that the Morrisons brand does work outside its heartland," he says.

"Morrisons looks a safe ship in these more troubled times for consumer stocks."

Bolland refuses to be drawn on which rivals the group is winning market share from, but analysts have pointed to Sainsbury, Tesco and Marks & Spencer.

Morrisons' arch Yorkshire rival, Asda, has predicted that Morrisons and Asda will be the big winners in 2008 as consumers tighten their belts.

Asda's internal research suggests that Morrisons lost some 850m in sales in 2005-6 following its troubled 3.35bn takeover of Safeway.

Asda claims that the biggest beneficiary was Tesco which gained 60 per cent, followed by Sainsbury's which gained 29 per cent and Asda which gained 11 per cent. Asda argues that as Morrisons reclaims these customers, it will be Tesco and Sainsbury's who lose out the most.

Bolland, who has a strong background in marketing, is credited with bringing four million new shoppers into Morrisons over Christmas with his ambitious TV campaign – estimated to have cost about 15m.

"A lot of people had never been into a Morrisons," he says. "They saw Market Street and really liked what they saw. The advertising got them through the door."

Andrew Kasoulis at Credit Suisse says the advertising has succeeded in breaking down barriers with customers in the South.

"I think it has taken a while for the southern customers to understand that Morrisons is a fresh-food grocer," says Kasoulis. "It's not just about pies and pasties, it's about a very broad and high-quality fresh food range."

Bolland warns he expects the market to remain very competitive in 2008.

"We are cautious for the outlook on consumer spending, but we believe our strong value credentials will serve us well in these conditions," he says.

Alongside its high-profile advertising campaign, Morrisons is conducting a 450m store overhaul which is expected to be completed in July.

Investors have pushed the group on when it will launch a loyalty card and, following the success of a new discount scheme for staff and their families, Bolland is looking into the idea and will make a decision next year.

But he has no plans to be pushed into internet retailing, despite being the only one of the Big Four supermarkets not to offer online shopping.

"It is very important for people to come in to Morrisons and experience Market Street," explains Bolland. "They can't do that via the web. If people don't know us they won't use the internet."

As Sir Ken announces his retirement this week, all eyes will be on Morrisons' annual results on Thursday.

Insiders say Sir Ken always wanted to exit with his head held high and the difficulties with the Safeway takeover firmly behind him. With predictions of an increase in pre-tax profits from 323m to 550m-570m, it looks like he will get his wish.Sir Ian ready to take the wheel

"Shrewd and quiet" are two of the adjectives used to describe Sir Ken's successor, Sir Ian Gibson.

Sir Ian's appointment marks the end of an era, with the company being headed by a non-family member for the first time in its 109-year history.

He may have spent 30 years in the motor industry, but Sir Ian Gibson knows his stuff when it comes to running Yorkshire supermarkets.

He was deputy chairman of Asda between 1993 and 1999 and he sat on the Leeds-based company's board during the takeover by US retail giant Wal-Mart.

Last July he was appointed deputy chairman of Morrisons and will take over as chairman when Sir Ken steps down.

Sir Ian has said he is looking forward to being part of "the dynamic and challenging" supermarket sector once more.

Businessman and former Conservative MP Archie Norman worked with Sir Ian at Asda in the 1990s and describes him as very shrewd and quiet.

"But he has his own mind and he is very good with people," says Norman.

Sir Ian has lived a colourful business life. He was chairman of plasterboard-maker BPB when it was taken over by French company Saint-Gobain in 2005 and, as chairman of Trinity Mirror, he oversaw the disposal of the Racing Post and newspapers in the Midlands and South East.

But perhaps his most high profile role was senior independent director at Northern Rock when the crisis hit the bank last year. Having joined the board in 2002, Sir Ian was one of the four Northern Rock directors to be called in front of the Treasury Select Committee last autumn.

When asked if the bank's executives could show more humility in the face of Britain's biggest banking disaster, Sir Ian said: "There is absolutely no arrogance on my part or on the part of the board; there is shock and there is distress".

He has spent 30 years in the motor industry and became president of Nissan Europe. He joined the auto industry in 1969 when he was taken on by Ford and he worked at Nissan from 1984 to 2001.

At Nissan he started up the UK business and then worked for their other European businesses in a variety of senior and chief executive officer roles.

In 2000, he became the first westerner on the Japanese board. During his time with Ford and Nissan he lived in Germany, Spain and Holland.

His other roles include a non-executive directorship at engineering group GKN, and he recently stepped down from his position as a non-executive director at bakery chain Greggs, to commit more time to Morrisons.

There is no doubt that Sir Ian is accustomed to difficult environments. At Ford and Nissan he was known as a hard negotiator with the unions and he has been through a very difficult six months at Northern Rock. Hailing from Manchester originally, he was appointed CBE in 1990 and knighted in 1999 for services to the motor industry.Why Heineken chief's style proved a refreshing change

When Marc Bolland was parachuted in from Heineken to sort out Morrisons, there were doubts about how the suave Dutchman would get on with plain-speaking Yorkshireman Sir Ken Morrison. Eighteen months on, Bolland has proved his critics wrong.

WITHIN minutes of our meeting at a Morrisons store for a personal tour, Marc Bolland is on his mobile to his property director to find out why there isn't a Morrisons near my house. He then takes great interest in my observations about the store, writing notes as we go along.

Bolland, 48, is a canny operator. I know I'm being flattered, but he seems completely genuine. He is utterly charming and suddenly it becomes clear why he gets on so well with Sir Ken, who has achieved many great things, but being charming isn't one of them.

When Bolland was appointed chief executive of Morrisons in 2006 there was a joke doing the rounds that Heineken may refresh the parts other beers cannot reach, but Bolland was going to need more than a few pints to resurrect Morrisons.

His appointment was marred by bitter infighting between Sir Ken and then deputy chairman David Jones.

But Bolland swiftly took overall control of the supermarket's day-to-day running, and so far he hasn't put a foot wrong.

He is credited with merging the best traditions of Morrisons with modern-day retail thinking. For a man with no experience as a retailer, Bolland has approached Morrisons with a fresh eye.

"Bolland was a great appointment," says one investor. "At the time Morrisons needed a leader, not a retailer. It had plenty of retailers already."

Insiders say that Bolland has built up a warm working relationship with Sir Ken. When I ask how he gets on with Sir Ken, he replies: "I am used to working with strong, intelligent entrepreneurs."

But do they disagree?

"Of course we sometimes disagree," he says. "I have come in with a fresh pair of eyes. Both Ken and myself have a strong, strong passion for consumers and an eye for detail."

As he says this he dives across the floor to pick up a piece of litter that has obviously been bothering him.

Bolland worked his way up through the ranks at Heineken – starting his career for the brewer in the Congo – before becoming chief operating officer, a gradual career progression that chimes with Sir Ken's way of thinking. Sir Ken's previous two right hand people had spent their working lives at Morrisons.

Bolland spent two decades working at Heineken, which is majority owned by descendants of the founding family, so he has experience of how to handle a boss with a vested interest.

He joined Heineken with an MBA from Groningen University in Holland, moving from Africa to Slovakia and finally back to Holland where he became chief operating officer.

Following Bolland's appointment in June 2006 Sir Ken said

of him: "I was impressed that he spent 20 years with Heineken. I didn't want someone who stays for three years then disappears."

Bolland believes that Morrisons needs evolution, not revolution and says the group's key strength is the fact it runs its own abattoirs and prepares fresh food in store from scratch.

Bolland has kept a low profile since joining Morrisons in 2006 and insists that the early part of 2008 is about "celebrating Sir Ken's career".

Bolland's office is right next door to Sir Ken's and insiders say that both doors are open throughout the day. Every Friday the pair have fish and chips together in the staff canteen.

Since moving to Yorkshire, Bolland has taken to the lifestyle.

He has bought a house in Harrogate, taken up clay pigeon shooting and he is restoring a vintage 1966 DB6 Aston Martin which he plans to

drive down Yorkshire's scenic country lanes.

He has also adopted Leeds United as his football club and his face lights up when he tells me he was there supporting the team last week.

He will be keeping his fingers crossed that in this tough economic climate Morrisons doesn't suffer the same false dawn as his football club. So far under Bolland, it doesn't look likely.

 
 
 

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