Morrisons goes upmarket in launch of convenience stores

MORRISONS is to trial its new convenience store format ‘M Local’ in the affluent town of Ilkley as part of a drive to attract a more upmarket audience.

The Bradford-based supermarket chain will open the ‘M Local’ on the former Bradford College site on Bolton Bridge Road in July, the first of a three-store trial of its new convenience store format.

The decision to locate the store in Ilkley, one of Yorkshire’s most wealthy areas, is part of Morrisons’ plan to test the concept with a wealthier audience than the average Morrisons store attracts.

Sign up to our Business newsletter

Sign up to our Business newsletter

Ilkley, which has some of the highest house prices in Yorkshire, will give Morrisons the chance to test the ‘M Local’ format in a small middle class area.

The move will put Morrisons head to head against Tesco, which has run into controversy with plans for its new Ilkley store.

Tesco has started work at the old Spooner factory which is being demolished to make way for the new store, which has been opposed by many local residents. The new Tesco store will be finished next year and will replace the current store on Springs Lane.

The new Morrisons convenience store will sell many of the group’s upmarket ranges including its ‘The Best’ top tier range. The store will be designed to appeal to commuters coming home in the evening who want to buy something for dinner.

The focus will be on fresh food and while there won’t be Morrisons’ trademark butchers, bakers and fishmongers in store, the Ilkley shop will contain a wide range of meat, fish and fresh fruit and vegetables.

Morrisons has brought in a new implementation team to trial the three convenience stores.

Miles Foster, a former area manager, will oversee the three pilot stores and Keith Wright will be in charge of the commercial side and will decide what products should be stocked.

The other two trial stores will be on the outskirts of Manchester and Merseyside.

While the focus in Ilkley will be on the more affluent shopper, Morrisons is keen that its convenience stores appeal to a wide demographic.

Morrisons’ head of media relations Julian Bailey said: “We think there is a gap in the market for a convenience store operator that sells fresh food well. At the moment there isn’t the variety and quality of fresh food that people are looking for.”

Morrisons recently appointed a new director of strategy Gordon Mowat, who is ex-McKinsey. He will develop the convenience store strategy based on what the group learns from the pilots.

Morrisons’ chief executive Dalton Philips is keen to explore a wide range of new ideas.

Over the past year, he has trialled a number of new innovations at three ‘lab’ stores, in York, Kirkstall, and Shrewsbury.

These include adding a sense of theatre to the shopping experience. Fishmongers in the York store now set up their displays in front of customers rather than having it all ready when the store opens at 8am. This has shaved an hour-and-a-half off the working day as the fishmongers start at 7am rather than 5.30am. If this were rolled out, it could knock £8m off wage costs.

Morrisons has also announced plans to crack the elusive London market with the launch of an online food operation targeted at the capital.

The launch will be focused on London and the surrounding area as Morrisons is massively under-represented in this region.

Mr Philips said: “We have only got a 6.5 per cent market share in London so the opportunity to grow is large.

“There are locations that we’ve got to get into and can’t get into – London is one. So the internet is the way in.”

He added that if the model can work, it will be extended across the country. However, the main focus will initially be on London.

Morrisons is adopting an unusual approach to its online food operation, which won’t launch until 2013.

The company has bought a 10 per cent stake in New York online grocer FreshDirect, one of the few profitable online food operations in the world, for £32m.

As part of the deal, a top team from Morrisons will work alongside the FreshDirect team learning how to run the operation.

Mr Philips said the group had decided to take this route after 17 management consultants presented their ideas on the best way to launch an online food service.

When asked if any of them had successfully launched a profitable online food operation, all 17 said no.

Morrisons then cast its net around the world and settled on FreshDirect as the most likely to match its needs. Both companies have a strong focus on fresh foods.