Struggling supermarket Morrisons must go back to basics to restore its fortunes, its new chairman has told The Yorkshire Post.
Andy Higginson said the Bradford business needs to return to the founding principles of Sir Ken Morrison and “do a good job for customers”.
The former Tesco finance chief also wants to re-establish better relations between the business and the Morrison family.
Frustrations boiled over at last summer’s AGM when Sir Ken Morrison blasted the company’s strategy as “bull****”.
Morrisons has had a torrid time over the last three years with plunging sales, profits and market share as chief executive Dalton Philips tried to modernise the company.
He was sacked earlier this month after sales fell again during the all-important Christmas trading period.
Mr Higginson is now overseeing the search for a new CEO and is working full time to re-orientate the business.
“It is all hands to the pump at the moment,” he said.
Mr Higginson added: “The broad thrust of the strategy is right but it would be disingenuous to pretend nothing is going to change. I think quite a lot is going to change.”
Mr Higginson said Morrisons’ online and convenience offerings are “businesses for the future”.
“The most important thing for Morrisons to do at the moment - let’s be honest the business is not in the best shape - is focus on the core supermarkets,” he added.
These make 110 per cent of profits, which are funding the two start-ups, he said.
Mr Higginson said the principles with which Sir Ken built the £15bn business are “completely relevant” today.
“What the business won’t be is exactly the same as it was in 2008 when he retired,” he added.
“Customers move on, the things they want move on, but the basic principles of serving those customers… of a fantastic reputation in fresh food… of being adaptable and flexible to customers and trying to meet and exceed their expectations are very simple principles that pervade the best businesses today.”
Mr Higginson said the company is “well on” with the hunt for a new CEO and is trying to move as quickly as it can to find the right person.
The official line is that Mr Philips is staying on until March.
Mr Higginson said it would be a mistake to assume he will recruit from Tesco, where he was an executive director for 15 years until 2012.
He said: “To be clear, I have no intention of making Morrisons Tesco. The very clear objective is to make Morrisons Morrisons.
“Ironically, it is the most distinctive of all the Big Four supermarkets in the way it operates and yet that doesn’t necessarily come across to customers.
“We need to come out and reaffirm what Morrisons stands for in the way they always used to.”
‘This is not a messiah strategy or Eureka moment in the bath’
Andy Higginson might be a heavyweight of the retail industry, but he knows that it will take more than one person to turn around Morrisons.
“It’s not a messiah strategy,” he said. “It’s about lots of people chipping in.”
Sitting at the head of the table in his large, spartan office at the grocer’s headquarters in Bradford, Mr Higginson fielded my questions about his plans for the business, the sacking of Dalton Philips, his relations with Sir Ken Morrison, the company’s place in the market and the challenges of operating in the most competitive retail sector in the world.
“My plans are to try and help the business get back to winning ways. It won’t be me who does that, it will be the team and we start with the leader of that team, which is the chief executive,” he said.
Mr Higginson became chairman a little over a week ago. His CEO is due to leave the business in mid-March. He is working five days a week, at least, at the moment.
Mr Higginson joined Morrisons as chairman designate in October after a stellar career in retail and grocery. He replaced Sir Ian Gibson, a former Nissan executive, who occupied the seat for eight years.
He spent the intervening months touring stores and talking with staff, building up an understanding of the business, its problems and its opportunities.
“The most important thing is to focus on the things we can do something about, whether that’s service, availability, our own-label prices and each week try and do a better job for customers than we did last week and most importantly do a better job than our competitors,” he said,
“Those are the principles the business was founded on. There’s nothing complicated about it.”
Mr Higginson said he is very proud to be chairman of Morrisons, “a wonderful business”, and he said he is very optimistic about the opportunity to improve it.
He added politely: “It slightly lost its way through the recession. If we get back to some basics it has got every chance of winning in the future.”
To illustrate the size of the challenge, Morrisons has lost around a quarter of its stock market value over the last year.
Asked why it was necessary to part company with Mr Philips, Mr Higginson said “the numbers for speak for themselves” and the business needed “fresh eyes... and a new impetus”.
He said the strategy is “broadly okay” with “perhaps a change of emphasis, a change of pace and orientation in some areas”.
Mr Higginson has been in store with Sir Ken, the former chairman who transformed a small northern grocer into a £15bn retail giant.
“He has forgotten more than I know, probably, about this industry,” said Mr Higginson, who is keen to re-establish better relations with the Morrison family, still significant shareholders in the business.
“It all depends on results, I’m under no illusions about that. The business has to be better and I think they have been frustrated by the performance as have most shareholders.
“The job of the board is to create shareholder value. That’s our mission and if we do it the right way, customer led, we will be able to rebuild that relationship and they will feel more comfortable with what’s going on in the store with their name above the door.”
Mr Higginson said turning around Morrisons will be “a game about small things” and is “not a Eureka moment in the bath where you suddenly reinvent food retailing”.
A big challenge for Morrisons will be winning back ground lost to German discounters Aldi and Lidl. He said the business has to get the prices right on basics to deny the discounters any oxygen and then offer customers the butchers, the fresh produce, the great offers on brands and the innovative own-label goods to give them more reasons to shop with Morrisons.
Mr Higginson said consumers get a trade-off at “monotone” discounters, which do not offer a great shopping experience.
He believes that Morrisons has a number of very distinctive and very great strengths and he wants to build on those.
“This has never been a zero-sum game, a question of one retailer killing everyone else. There is plenty of room in this market for retailers with differentiated offers to exist side by side and you are just looking for that marginal customer. You are looking for a few more customers to come in every week.”
The best regulator in any market is competition
As an executive director at Tesco, Andy Higginson often encountered concerns among the competition authorities about the dominance of the retail giant.
His argument was that customers could always go five minutes down the road to shop at a rival if Tesco did a bad job.
“There was always a scepticism to that,” he said. “In the last three years, sadly, all the supermarkets have proved that is true. When it was Christmas 2013 the Big Four collectively lost market share for the first time. That was a very significant moment, it was a real indication they had not done a job for customers and customers had voted with their feet.
“The best regulator in any market is competition. If customers have a choice and can go somewhere else... you don’t really need regulators. It is done for you.”
In good economic times or bad, the only way to win customers is to do a good job at great value, added Mr Higginson.
He told The Yorkshire Post: “Customers want it all. They want great products, they want it to be in stock when they come in, they want a nice environment, they want a really good choice and all of those things together.
“The economy turning up won’t make it all okay, you have got to win the customers back.”