As part of a major turnaround plan implemented by Mr Potts two years ago, the retailer has focussed on refurbishing shops, improving its food ranges with the addition of a premium ‘Best’ line to reel shoppers back in, and lowering prices; crunching the price on more than 2,000 products.
“Morrisons has quite simply been transformed over the past two years. Given the cut-throat market we are in, this has been one of the great retail turnarounds.” John Ibbotston, Retail Vision
The Bradford-based grocer has been making the most of it’s British manufacturing facilities and supply chain by sealing wholesale deals with Amazon, petrol station group Rontec and most recently convenience chain McColls. These deals put Morrisons in a strong position to compete on price by making the most of efficiencies within its supply chain.
However, the retailer admitted price increases on some categories such as butter and cream due to rising wholesale prices, with Mr Potts stating “we can’t defy gravity," although saying supply-chain efficiencies “should mean cheaper packs of bacon on the shelves".
Behind the 40pc soar in profits, Morrisons posted 3pc growth in like-for-like sales, up 2.6pc in the second quarter of this year. Total sales were up 4.8pc to £8.42bn compared with £8.03bn during the same period last year.
“Further signs of positive momentum from Morrisons this morning, particularly with transaction numbers increasing. The challenge however continues to be the reduction in basket size – a problem shared by a number of big store retailers as shoppers buy less more regularly and increase their use of discounters. The next 12-18 months will continue to be difficult with potentially softening consumer confidence and the ongoing pressures of cost price inflation.” - Alastair Lockhart, Savvy
Going forward, Morrisons will be strategically focussing upon improving online sales and home delivery service, finding local sourcing solutions, diversify their core business functions and streamlining their business operations.
Read the full report, here.