One of the first things Morrisons’ CEO David Potts did when he took over as boss of the Bradford-based firm three years ago was to quietly remove the controversial misting machines that sprayed vegetables with a theatrical mist.
While misting machines might appeal to upmarket Waitrose shoppers, Morrisons’ customers just want cheap, good quality veg and that’s what the group offered in abundance over Christmas, selling bags of festive vegetables in a three-for-£1 deal.
Mr Potts deemed the misting machines as an expensive indulgence that wasn’t in keeping with the group’s canny shoppers.
Morrisons has emerged as one of the best festive retail performers, boosted by strong sales of its premium ‘Best’ range which enjoyed 25 per cent growth.
Mr Potts said customers were on the lookout to spend on life’s little luxuries and the group’s ‘Best’ range hit the spot.
The Bradford-based firm reported a 2.8 per cent increase in like-for-like retail sales over the six weeks to January 7 and said it managed to keep prices level with last year despite soaring inflation.
Morrisons said it had worked hard to offset rising inflation and the price of a festive basket of goods was the same as last year.
The group said it achieved this by “selling more things that people want to buy” rather than squeezing suppliers or denting margins. It is expected to announce a 10 per cent increase in annual profits to £371m.
Mr Potts praised store colleagues for their hard work over the festive season and said customers had noticed shorter queues and the friendliness of staff.
More tills open and shorter queues are rated highly by time-pressed customers.
Mr Potts has simplified Morrisons’ store layouts and cut back promotions in favour of lower prices.
There are more staff on the shop floor to help customers and both availability and stock levels have improved.
Online sales at Morrisons.com grew by more than 10 per cent, with the group delivering to more areas of the UK through its partnership with Ocado. Morrisons came late to online shopping so it should see further growth in the area as it catches up with rivals.
Morrisons has also confirmed its wholesale deal with the McColl’s convenience store chain will begin rolling out this week as part of plans to build a “broader, stronger” group.
Mr Potts has led a recovery of the grocery chain by investing in price cuts and calling time on under-performing stores in attempts to turn the page on the supermarket’s ill-fated era under previous management.
The McColl’s deal is part of his turnaround efforts and will see the group relaunch the Safeway brand.
The partnership will see the supermarket supply Safeway and branded products to 1,300 convenience shops and 350 newsagents.
Mr Potts has also signed a deal with online retail giant Amazon, which gives it access to a very different kind of internet-savvy customer.
Instead of spending millions of pounds on convenience stores (the M Local launch under previous management was a disaster), Mr Potts is also trialling smaller stores at Rontec petrol forecourts.
Mr Potts’ mantra is why pay out good money when you can achieve good growth for free.
Unlike his predecessor, Mr Potts doesn’t like expensive gimmicks. In fact he doesn’t like paying any money at all.
While Tesco is forking out £3.7bn for wholesaler Booker, Morrisons is just cracking on with expanding its own in-house farming and packing operations at a fraction of Tesco’s costs.
Mr Potts is exactly the kind of leader former boss Sir Ken Morrison wanted. He has a tight hold on the purse strings and is constantly thinking up new ways to make money without splashing cash on expensive acquisitions. Partnerships are a clever way forward.
They produce profit without Morrisons having to spend a penny.