Morrisons' smart strategy in difficult times

Morrisons' smart strategy in difficult times

British retail chain Morrisons is planning to open hundreds of “M Local” convenience stores in the next few years, following the success of its first 280 m² trial shop in Ilkley, Yorkshire. The new strategy aims at avoiding the bloody price war in the middle of the (super)market and could well be a smart strategy in these difficult times.

Affordable convenience

Yesterday the local Yorkshire Post reported about Morrisons' ambitious plans to grow through M Local, which would offer “convenience store quality” (a wide offer of fresh food products) at “supermarket-like prices”, which the chain claims to be “4 to 11% cheaper than other convenience stores”. While market leader Tesco and runner up Asda focus on lower prices, Morrisons will invest in up-market stores – hoping to open hundreds of M Local stores in local markets with higher average incomes. 

 

”Many of the major supermarkets have been hitting the price button, with mixed results, while Morissons has been quietly going about its business hitting the fresh and quality buttons to great acclaim”, says Bryan Roberts, Kantar Retail's research director. “Its promotional structure means that it still conveys affordability while avoiding the high/low disruption of others.”

"A Waitrose for the masses"

M Local's different approach to focus on quality and freshness, rather than on prices, is just a matter of intelligent positioning, says Roberts. “Waitrose's continual outperformance of the market shows that quality wins, and Morrisons seems intent on becoming a Waitrose for the masses. The middle ground is the last place you want to be, so heading up market while retaining a value message makes perfect sense.”

 

Aldi and Lidl, who have a slightly different price-value message in Britain, are no threat to Morrisons, says Roberts: “They are doing a few more premium lines but they are still a relatively niche segment appealing to mainly low income shoppers (despite all the hype to the contrary). Stores make a degree of sense due to real estate availability and that Morrisons will have a point of difference through fresh.”

Opting for a flanking manoeuvre

This strategy is only possible because M Local can get their quickly changing offer of fresh food from nearby Morrisons supermarkets. This is a way to reach more (relatively up-market) customers through differentiation near any of the 455 existing Morrisons supermarkets, but makes it impossible to use M Locals to reach new areas.

 

In choosing a growth strategy inspired by convenience, Morrisons opts for a flanking manoeuvre rather than launching a brute-force frontal attack in a price war. This way, 'M' avoids the bitter competition between the top two (Tesco and Asda) and the discounters (Aldi and Lidl), while the British number three Sainsbury’s is anxiously trying to escape from the fight. Morrisons is apparently the only chain amongst the four major British retailers that succeeds in growing, despite the times of crisis...

Questions or comments? Please feel free to contact the editors


Lubach: “Fair clothing is a matter of priorities”

15/11/2017

Ever since the Rana Plaza disaster, the clothing industry has clamoured for transparency in the clothing manufacturing branch, but Zondag met Lubach’s Arjen Lubach proved on Sunday that there is no actual transparency yet.

Fashion chain Canada Goose opens first European store

14/11/2017

Canadian fashion chain Canada Goose opened its first European store in London. The brand’s clothing has been in Europe for quite some time, but only at multi-brand stores up until now.

Desigual suffers turnover blow in first three quarters

14/11/2017

Spanish fashion chain Desigual suffered a blow in the first three quarters of 2017, with turnover  down more than 10 %. It mainly struggled in Europe, a region where it generates almost all of its turnover.

Two or three stripes on clothing are Adidas' property

13/11/2017

Swedish store chain H&M can no longer use parallel stripes on its (sports) clothing, because they resemble Adidas’ three stripes too much, according to a The Hague court.

Strong third quarter for Adidas

10/11/2017

Sports clothing manufacturer Adidas experienced a strong third quarter. Its growth was slower than in the previous quarter, but its operational profit exceeded analysts’ expectations.

Yoox Net-a-Porter grows but still failed to live up to expectations

09/11/2017

Online retailer Yoox Net-a-Porter’s third quarter like-for-like turnover grew 17.7 % to 481.8 million euro, which is not entirely what analysts had expected. Its growth slowed down in the United States and China in particular.

Back to top