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Opinion and Insight

It's Time for Morrisons to Refine Its Brand... And Stick To It

Brand Union London, 2 years, 9 months ago

MD at Brand Union London Jonny Westcar on why simply cutting prices isn't enough

It's Time for Morrisons to Refine Its Brand... And Stick To It

The grocery industry grew only a fraction last year, however discounters Aldi and Lidl grew by a whopping 35 per cent and 25 per cent respectively. Why? Because they engaged consumers well, changing views on low pricing through simple, clever advertising. More importantly, both fiercely stuck to their values, innovating and simplifying products and service at every opportunity.

In contrast, Morrisons, despite some considerable historical success, is suffering a branding predicament. It simply isn’t clear what value the brand offers that is different. This issue has been thrown into sharp focus by its own recent leadership announcements and the market performance of competitors, including the rise of the discounter and the fall, or at least the overextension, of Tesco, the mid-market grocery bellwether.

With poor sales over the Christmas period and its market share falling to 11.3 per cent, positioning itself ‘for growth’, which the new chairman Andrew Higginson has indicated, may not be to the brand’s benefit at the moment. Instead Morrisons could be better focusing on its core grocery – fresh, local produce and value – and innovating around that to find a competitive edge.

Price matching alone will only go so far and quicken the race to the bottom for Morrisons. Relatively recent developments such as the ‘Match and More’ scheme, M local convenience format stores, as well as on-line shopping and home delivery services are now simply table stakes in what is a highly attritional grocery marketplace, particularly in the middle ground. A good price deal and convenience are simply expected by shoppers.

This leaves few options – a look to operational efficiency to lead on price ahead of the competition?  Perhaps hard when out of all the mainstream grocers Morrisons' mix of branded groceries vs. own label is one of the highest and their market share one of the lowest amongst the major players. I’m not convinced Morrisons possesses the buyer power and distribution to sustain this approach.

Tesco is licking its wounds and is likely to come back hard and focus on leveraging its substantial buyer power, customer reach and distribution channels around a core grocery offer that Morrisons may find hard to compete against with a like for like product and service offering. Morissons is at real risk of being squeezed out of the market between Tesco and the discounters.

Outside of The City, the Morrisons' brand has an unsullied honesty and an increasingly dated familiarity associated with it. In addition, perhaps more of a sense of locality and community than the others that could help differentiate it as a challenger brand focused on local grocery ‘hubs’ that offer quality, price and provenance for core grocery items.

How can the brand leverage Morrisons' strengths? A highly loyal (yet eroding) core customer base, freehold on real estate, meaning store formats and shopper experience could be a longer-term strategic investment. Its food producing operations, its farms and bakeries for example, can help demonstrate honesty, relevancy and locality.  How can Morrisons make a ‘hero’ of its local product mix?  Depending where you live in the UK, the simple ‘bun’, ‘bap’, ‘cob’ or ‘roll’ may be the answer.

Jonny Westcar is Managing Director at Brand Union London

Category: Retail and restaurants , Supermarkets

Genre: Strategy/Insight