Blackfriar: Morrisons should go for simply 'The Best' after setback

The news this week that Bradford-based supermarket Morrisons has lost market share for the first time since 2007 will make grim reading for new chief executive Dalton Philips.

According to market research group Kantar Worldpanel, Morrisons' market share fell from 12.1 per cent to 12.0 per cent in the 12 weeks to November 28.

Analysts say that Morrisons has been hit by a triple whammy of customers trading up, big store openings by Sainsbury's and Tesco and a rejuvenated Asda.

In addition the boost from its acquisition of Somerfield stores has started to fade.

In contrast Tesco, the UK's biggest retailer, grew its share of the grocery market for the first time since May.

Tesco was helped by a drive to increase rewards to its most loyal customers, despite the recent glitches with its Christmas loyalty card promotion.

Sainsbury's, the third biggest player, was the fastest-growing of the UK's top four supermarket groups in the 12 weeks to November 28, continuing its recent winning streak. Its market share rose from 16.1 per cent to 16.4 per cent.

Leeds-based Asda, which is second after Tesco, managed to hold its market share for the first time this year at 17.0 per cent.

Asda, which is owned by US retail giant Wal-Mart, is enjoying a renaissance under new chief executive Andy Clarke.

He will be thrilled that the revamp of the group's own-label range, now called "Chosen by You", is going down so well with customers.

He rightly identified that Asda shoppers had become cheesed off with the food not being up to the chain's former standards and has set the group back on track.

Kantar also highlighted strong growth at premium retailers, with upmarket chain Waitrose continuing to outpace its larger competitors with its market share growing from 3.9 per cent to 4.1 per cent in the 12 weeks to November 28. It appears that many shoppers are tired of downtrading. There is some truth in former enterprise adviser Lord Young's comments that most people have never had it so good, even though the remarks cost him his job.

If you're lucky enough to keep your job in this environment, then the reduction in mortgage repayments means a sizeable proportion of the population are significantly better off.

In the lead-up to Christmas people want to forget their economic woes and treat the family. That means splashing out on affordable luxuries.

Mr Philips might want to take a leaf out of Asda's book and try a revamp of Morrisons' premium range "The Best".

However if the economists are right and we are set for an austere New Year, with Legal & General predicting that the VAT rise in the New Year will lead to a drop off in consumer spending, then shoppers might return to Morrisons.

This could well be a seasonal blip. Mr Philips will be crossing his fingers that that's the case.

n As booming figures from the CBI's industrial trends survey show, British manufacturing is getting a healthy boost from the weak pound which is buoying exports.

The CBI's total order book balance spiked up to a 30-month high of -3 per cent in December from -15 per cent in November, way above analysts' expectations.

But no-one expects this to last forever. How well can manufacturing activity hold up as stock rebuilding draws to a close, exchange rates are re-balanced, spending cuts weigh down on domestic demand and slower global growth threatens foreign demand?

Amid this medium-term uncertainty, Blackfriar found it refreshing to hear one Yorkshire industrialist call for the sector to stand on its own two feet.

Even as South Korean protectionism and BP's Gulf of Mexico oil spill dragged down Sheffield gas cylinder firm Pressure Technologies' annual results, its chief executive John Hayward said manufacturing should stop going cap-in-hand to government.

"We should be creating an environment in which it (manufacturing) can flourish," he said. "But businesses should be able to stand on their own two feet. If they cannot, they do not deserve to be there."

Pressure was itself the beneficiary of grant funding and investment in its early days, and Mr Hayward said while early funding is vital to give companies a leg-up, they should be able to compete with low-cost rivals if they are good enough.

Mr Hayward told how he clinched a recent deal to buy Hydratron, which designs and makes high-pressure hydraulic pumps, and is embedded in the US oil hub of Houston. In the face of stiff competition, he sealed a 3.3m deal to buy the firm by showing its owner around his Sheffield factory.

"The important thing is proving to people that you care about manufacturing," he said. "Where does British manufacturing industry do well? It does well where you get good design and engineering know-how. It cannot be easily replicated."