Blackfriar: It's non-food for thought as Morrisons plans next move

Yes, previous incumbent Marc Bolland, who jumped ship to join Marks & Spencer, decided to keep it business as usual at the Bradford store chain, but that was during a period of rehabilitation after the momentous Safeway takeover.

Now the market is demanding something new and according to analysts there are four choices.

The first is to launch a loyalty card, following Sainsbury's and Tesco which both enjoyed huge success with their loyalty programmes over Christmas.

But this isn't in the Morrisons spirit. Morrisons thrives on special promotions.

Its shoppers demand low prices at the check-out rather than the promise of jam tomorrow.

So how about online shopping? In the past Morrisons has rejected this avenue as it wants to get shoppers instore sampling the products for themselves and experiencing the Market Street concept.

Market Street is something unique to Morrisons – so much of its produce is produced fresh in the store and it wants to stick to that principle.

Another reason why neither reward cards or online shopping are likely to take off is that Morrisons does not have the IT infrastructure to support them. It is spending a lot of time and effort to bring its IT standards up to the levels of its rivals, but this is some years away.

So how about the third option? Go abroad. Let's not forget that Morrisons had a tough enough time bringing its Yorkshire concept to the South. Initially the store was derided for its hot pies, flat cap and whippet connotations.

Despite Philips' international expertise, Blackfriar can't see a move abroad in the near future.

When asked at the preliminary results last week if international expansion was likely, chairman Sir Ian Gibson brushed it off saying: "I'd far rather we got to Chelmsford than anywhere else."

Point taken, with seven million UK households outside the catchment of a Morrisons store there is plenty of UK expansion to go for.

The group has announced plans to embark on an ambitious expansion programme with 60 new stores scheduled to open across the UK over the next three years.

Morrisons is keen to expand its footprint into parts of the South and Scotland where people have no access to a nearby store.

Analysts believe that the fourth option – an expansion into non-food – is the most likely.

Philips' extensive experience of general merchandise will stand the group in good stead if it decides to expand beyond the kitchen accessories it currently offers.

At a time when shoppers are keen to do all their shopping in one go, there could be huge scope for clothing, entertainment, electricals, toys and even furniture in Morrisons' larger stores.

Philips' initial thoughts on the business are likely to be presented alongside the interim results in September.

Non-food currently makes up just six per cent of sales so there is an enormous untapped market for Philips to go for. Once he has launched into general merchandise there is no reason for the group to stop there.

At a time when bankers' bonuses are in the headlines again, there is an opportunity for a Morrisons banking operation.

People trust supermarkets and Morrisons has a loyal customer base.

Once a banking operation is up and running it could launch any number of services from insurance to pharmacies.

With the Safeway turnaround behind it, Philips is joining Morrisons at just the right time.