Blackfriar: How canny boss David Potts is guiding Morrisons back to recovery

David Potts, '‹the man overseeing Morrisons' renaissance, is a canny player. Just like former chairman Sir Ken Morrison, he doesn't like overpaying for anything.

After years of mismanagement when former directors did all sorts of silly things to a much-loved Northern brand, Mr Potts is steering the Morrisons ship to calmer waters.​ Whereas previous management tended to throw money at the problem, Mr Potts has proved a lot more astute.​

Three of his most innovative moves have involved joint ventures with other firms that will expand Bradford-based Morrisons’ coffers at very little risk.

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The first was a deal to trial ​Morrisons food in five petrol stations owned by Motor Fuel Group, the second largest independent forecourt operator in the UK.

The shops, which are all above 1,200 sq ft, are branded as Morrisons.

If the pilot is rolled out across the estate this would give Morrisons a sizeable ready-made convenience store chain without the expense of its previous operation​.

Previous management wasted millions buying up a convenience estate that was in the wrong place (tertiary sites that no-one else wanted) and it was sold off by Mr Potts for £25m. The chain was sold to My Local, which went bust two months ago.​

The tie-up with Motor Fuel Group is a no risk venture – if the trial is successful Morrisons gets access to 373 convenience stores with none of the hassle and expense of buying sites.

The second was Morrisons’ tie-up with US giant Amazon. The big supermarket players were quaking at the thought of Amazon stealing their customers by launching Amazon Fresh in the UK, but the retail giant has selected Morrisons as its partner instead of launching its own service.

The deal is introducing wealthy Amazon Prime customers to Morrisons’ cut-price fresh and frozen food offering and is said to be going well.

The third is a rearrangement of its costly deal with Ocado, which was announced three weeks ago.

Morrisons said it will reach millions more customers following the new deal with online supermarket to extend its home delivery service nationwide.

The new contract will allow it double the reach of its delivery and enter new markets such as the South West and Scotland.

Morrisons has renegotiated its agreement with Ocado to allow it to store-pick orders, doubling the reach of its deliveries.

A Morrisons spokesman said: “We might decide we want to deliver from a local store - we could do that in Yorkshire rather than from Dordon (Ocado’s centre in Warwickshire).

“The second point is it’s a renegotiation and we have extracted better terms. Also we’re not having to share future profits. We are paying far less upfront.”

Morrisons original £170m deal with Ocado, which was struck under former management in 2013, was seen as being far too generous to Ocado. Analysts said Morrisons had negotiated a much better deal financially.

This week Mr Potts made another clever move - the hiring of grocery veteran Barry Williams as trading director for ambient goods. Mr Williams will take on considerable responsibilities for central components of the Morrison retail offer; core grocery, beers, wine & spirits, baby goods, household and health & beauty categories.

Analyst Clive Black at Shore Capital said: “David Potts has made another good appointment to his senior team in our view with the addition of well-known, experienced and likeable Barry Williams. The appointment signals the more attractive nature of Morrisons as a home for good talent in the UK retail scene. We suspect that he would have been sought after by a number of leading retailers.”

​This appointment is another clever move by Mr Potts at a time when the grocery market is set to get a lot more challenging as sterling’s collapse post Brexit raises the price of imports.