After only a month in the job, Morrisons’ new boss David Potts has slashed the company back to basics, culling a third of head office jobs and half the board while creating 5,000 new jobs on the shop floor.
Alongside former Tesco veteran Andy Higginson, Mr Potts has binned the frivolities, saying goodbye to multi-millionaires Ant and Dec and Dalton Philips’ iconic misting machines and hello to a new focus on the customer.
The biggest battle the pair face is persuading disgruntled shoppers who got fed up with yo-yo pricing to return to the Morrisons fold.
The biggest battle the pair face is persuading disgruntled shoppers who got fed up with yo-yo pricing to return to the Morrisons fold. Many ditched the Bradford-based chain in favour of discounters, Aldi and Lidl, which are on average 10 per cent cheaper.
Others have decamped to Leeds-based rival Asda, which has maintained a much clearer proposition on pricing at a time when Morrisons’ prices were escalating wildly which sometimes made them more expensive than Sainsbury’s.
One of the first things Mr Higginson did was to fire CEO Mr Philips and announce the closure of 10 stores with the loss of 400 jobs, setting the tone for future cuts.
One of the next moves was more low key – to ditch the controversial misting machines, the ultimate symbol of Mr Philips’ attempts to broaden the supermarket’s appeal to a more upmarket audience.
The machines were seen as a sign of decadence by former management. Former chairman Sir Ken Morrison said they highlighted how Mr Philips had alienated core shoppers.
Then came the split with TV stars Ant and Dec, ending a two-year multi-million pound advertising deal as Mr Higginson decided advertising should emphasise the group’s low prices and top quality.
Mr Potts’ appointment was announced in February, much to the delight of the City and the old guard. Sir Ken said: “I think his appointment is a good thing. We need to go back to the old standards that have been lost in the last few years.”
In March, Morrisons announced a massive annual £792m loss. Like-for-like sales fell six per cent, the worst performance among the big four supermarkets. Mr Higginson also announced the closure of 23 under-performing M Local stores.
Rivals say that Morrisons was so keen to join the race for convenience stores it took on sites that others wouldn’t touch.
One of Mr Potts’ first moves was to abandon the queue management system which had annoyed both staff and customers and just a week after starting, he ousted six directors from the 11-strong management team – the so-called “bloodbath in Bradford” – in order to simplify and speed up the business.
The next move was to instruct all head office staff to spend time in store over Easter to hear what customers actually think. Mr Potts has certainly listened to customers and staff – in fact he’s left no stone unturned. When staff slated the repetitive store music he brought in 9,000 new songs.
The big news this week is the cull of 720 head office jobs and the recruitment of 5,000 shop floor staff.
Mr Higginson believes that getting Morrisons back to robust health will take three to five years.
“There’s a lot of customers out there who would love to be shopping in Morrisons, but can’t at the moment because we’re not doing a good enough job,” he said.
“If we improve the work we do for them they’ll come back.”
Analyst Clive Black, at Shore Capital, said: “We believe that David Potts has hit the ground running at Morrison’s and his actions, in the main, will be welcomed by staff in store and those pressing on at the centre to take a leaner business forward.
“Much of the public face of the decision-making to date has a modest amount to do with stores and shoppers. In this respect there is clearly a whole lot more to do in terms of price and promotion, ranges and categories and nurturing Morrison’s points of difference in ‘Market Street’ and vertical integration.”