BLACKFRIAR: Morrisons is carving out a place in the winners' camp

Morrisons has announced its third consecutive year of improved sales and profits under the leadership of David Potts and his team.

Morrisons has registered this logo design
Morrisons has registered this logo design

The Bradford-based firm appears to be doing everything right.

Rather than splash out £3.7bn for a wholesaler (as Tesco has done with Booker), Morrisons has been quietly signing up a number of deals (with Amazon, McColl’s, Rontec and Sandpiper) that will strengthen its wholesale presence.

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At a time when we have no idea which way the Brexit talks will go, Morrisons is far less dependent on imports than its rivals.

Two thirds of its products are British and much of it comes from Morrisons’ own food production arm.

Mr Potts has said he would like to increase Morrisons’ sourcing of homegrown products and get British food supply above the current 66 per cent.

He said this will depend on customers getting behind their local producers and making the decision to support local farmers, growers and food manufacturers.

Morrisons and market leader Tesco are neck and neck as the fastest growing of the big four grocers​, with​ both ​seeing sales growth of 2.7 per cent, according to the latest Kantar Worldpanel data.

The market researcher said that Morrisons has continued its run of form, entering its sixteenth consecutive period of growth​ during the ​12 weeks to February 25​. ​

Morrisons’ premium own-label line The Best has proved particularly successful, with sales rising 20 per cent year on year.

​Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said​ ​Morrisons has been focused on rolling out its The Best range​, which is an area​ that​ ​the firm has been historically weak in.

Although cash is tight, people are willing to spend money on premium items​ and​ Morrisons can now shout about the quality of its food. ​Mr McKevitt said that Morrisons is also doing well with sales promotions.​ ​

There is still a substantial proportion of the British population that love the thought of getting a good bargain.

Laith Khalaf, ​s​enior ​a​nalyst​ at ​Hargreaves Lansdown​, said Morrisons​ has used its largely British supply chain to keep prices competitive, in a market where the falling pound has increased the cost of imported food.

​Analyst Clive Black at Shore Capital added​ that under the stewardship of Mr Potts, Morrisons has come “a long, long way from the distressed situation that the business found itself in 2015”.

Three years ago there were questions about the group’s future and a raft of bad decisions and over-spending.

Mr Black said that Mr Potts has set out a patient and detailed strategy, but one that had to be executed with considerable pace and guile, revolving around the aims to deliver higher but sustainable and broader based growth.

Morrisons has six key priorities: to be more competitive, serve customers better, find local solutions, develop popular services, simplify and speed up the organisation and so make the supermarkets strong again.

The retail sector has had a turbulent start to the year. We’ve seen Toys R Us and Maplin go bust and it is a question of when, not if, other retailers will collapse.

Mr Khalaf said the retail sector is polarising into winners and losers, as a result of tough trading conditions and changing consumer behaviour.

He said that Morrisons is carving out a place in the winner’s camp.

​It has been a long, hard journey to return Morrisons to its former glories, but the current management team appear to be getting there.

Mr Potts describes the group’s most important asset as its colleagues.

They are the backbone of the turnaround and rightly deserve the pay increases they have received.