Following today’s release of Morrisons’ figures for the 13 weeks ending 30th July 2023; Joe Dawson, retail analyst at GlobalData, a leading data and analytics company, offers his view: “Despite reporting positive sales growth and retaining its profit guidance from January 2023 in this latest update, Morrisons is still lagging behind competitors. Given that food inflation was around 15% during the grocers reporting period, total sales (ex.fuel) growth of 3.1% looks less impressive, reflective of Morrisons’ lateness in reintroducing its loyalty scheme and cutting prices to appeal to shoppers seeking cost-savings on their essential items. The private equity owned retailer reported like-for-like (l-f-l) sales growth of 2.9% year-on-year for the 13 weeks to 30 July, which while not directly aligning in terms of reporting periods, pales in comparison to Marks & Spencer’s 11% growth in food sales for the 19 weeks to 12 August and Sainsbury’s 9.8% increase in l-f-l sales for the 16 weeks to 24 June 2023. While its sales may not be growing at the same pace as other grocers, the supermarket has kept its earnings guidance for the full year as EBITDA increased 43.6% to £270m as its sales grew for a third consecutive quarter.
“Morrisons has shown some positive progress in attracting and retaining customers since the reintroduction of its More Card loyalty scheme and targeted price cuts. Bringing back the ‘More Reasons to Shop at Morrisons’ campaign in tandem with exclusive discounts for members and opportunities to gain points for money off future shops has proven to be a step in the right direction, with over one million additional active users of the More Card programme since May 2023. However, with 68.3%* of consumers being signed up to multiple loyalty schemes for different retailers, it will be important for Morrisons to differentiate and improve the visibility of its popular Morrisons Fiver reward to stand out from other loyalty schemes that are principally focussed on exclusive discounts. Morrisons opened 122 more Morrisons Daily convenience stores in Q3 FY2022/23 and an additional 89 so far in Q4 following the acquisition of McColl’s. This will be a much-needed improvement to the grocer’s convenience offer, and the recent announcement that the stores will be stocking its Savers private label range will be a key incentive for shoppers seeking value and convenience.
“The appointment of ex-Carrefour France chief exec Rami Baitiéh as replacement to CEO David Potts shows that the grocer is ready to move forward and embrace new ideas for its turnaround strategy, and its performance in the upcoming golden quarter will be an important signpost of progress to come. It will be crucial for Morrisons to improve the store keeping basics in the short term, focussing on availability, standards and customer experience.”
