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Morrisons

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Wm Morrison Supermarkets plc
Company typePublic LSE: MRW
IndustryRetail (Grocery)
Founded1899
HeadquartersBradford, England
Key people
Sir Ken Morrison, President
Sir Ian Gibson, Non-Executive Chairman
Dalton Philips, Chief Executive
ProductsGroceries, consumer goods
Revenue£14,528 million (2010)[1]
£671 million (2010)[1]
£460 million (2009)[1]
Number of employees
124,000[1]
WebsiteOfficial Website

Wm Morrison Supermarkets plc (LSE: MRW) is the fourth largest chain of supermarkets in the United Kingdom.[2] The company is usually referred to and is branded as Morrisons, and it is part of the FTSE 100 Index of companies. Morrisons' market share as of December 2008 is at 11.8%, making it the smallest of the "Big Four" supermarkets, behind Tesco (30.9%), Asda (16.8%) and Sainsbury's (16%), but far ahead of the fifth place Co-operative Group, which has a share of 4.4%.[3]

Originally founded by William Morrison in 1899, it started out as an egg and butter stall in Rawson Market, Bradford, England. Until 2004, Morrisons store locations were primarily focused in the north of England, but with the takeover of Safeway in that year, the company now has over 420 superstores across the UK.

The Morrison family currently owns around 15.5% of the company.[4]

History

Founding

The Company was founded by William Morrison in 1899, initially as an egg and butter merchant in Rawson Market, Bradford, England operating under the name of Wm Morrison (Provisions) Limited.[5]

His son, Ken Morrison took over the company in 1952, aged 26. In 1958 it opened a small shop in the city centre.[5] It was the first self-service store in Bradford, the first store to have prices on its products and it had three checkouts. The company opened its first supermarket "Victoria", in the Girlington district of Bradford in 1961.[5]

Publicly traded company

In 1967 it became a public limited company listed on the London Stock Exchange.[5]

Acquisition of Safeway

Morrisons store in Consett, County Durham, a former Safeway branch

In 2004 Morrisons, which operated mainly in the North of England, acquired Safeway, a quality British supermarket chain which owned 479 stores, mainly in Scotland and the South of England.[6] The acquisition quickly ran into difficulties caused in part by the outgoing management of Safeway changing their accounting systems just six weeks before the transaction was completed.[7] The result was a series of profit warnings being issued by Morrisons, poor financial results[8] and a need to revert to manual systems.[9]

The programme of store conversions from Safeway to Morrisons was the largest of its kind in British retail history, focusing initially on the retained stores which were freehold, over 25,000 sq ft (2,300 m2) with separate car parks. Within a few weeks, Safeway carrier bags were replaced by those of Morrisons and the new owner's own-brand products began to appear in Safeway stores.[10]

Originally 52 stores were to be compulsorily divested after the takeover, but this was reduced to 50 after one Safeway store in Sunderland was destroyed by fire and the lease ended on another in Leeds city centre. John Lewis Partnership purchased 19 to be part of its Waitrose chain,[11] while J Sainsbury plc purchased a further 14,[12] and Tesco bought 10 in October 2004.[13]

Unlike other operators, most notably Tesco and Sainsbury's, Morrisons had chosen not to move into the convenience store sector. Further to this policy decision, it was announced in late 2004 that the 114 smaller 'Safeway Compact' stores were to be sold off to rival supermarket chain Somerfield in a two-part deal worth £260.2 million in total.[14]

In Northern Ireland Morrisons sold Safeway's stores to ASDA. This included a store in Bangor which actually opened after the Morrisons takeover.[15]

Morrisons market share decreased after its purchase of Safeway, but it eventually grew again after the store disposals and conversions.

One of the largest single purchases in 2005 was that of five stores by Waitrose.[16] On 18 July 2006, a further six stores from the 'Rump' format were sold to Waitrose, including the former Safeway store in Hexham, Northumberland, which became the most northerly Waitrose branch in England.[17]

In May 2005, Morrisons announced the termination of Safeway's joint venture convenience store/petrol station format with BP. Under the deal, the premises were split 50/50 between the two companies.[18] Five sites were subsequently sold on to BP, while Morrisons sold the rest of its sites to Somerfield and Tesco, which both maintain a presence in this market sector.

Morrisons also sold Safeway's Channel Islands stores, in Guernsey and Jersey, to CI Traders.[19] On the Isle of Man, the Douglas store was sold to Shoprite and the Ramsey store was sold to the Co-op.[20] The Gibraltar store was originally marketed for sale, but has now been converted under the 'Rump' format. In November 2006, plans were submitted for the extension and redevelopment of the store in order to introduce the full Morrisons format.[21]

In September 2005 the Company announced the closure of former Safeway depots in Kent, Bristol and Warrington with the loss of 2,500 jobs.[22] The Kent depot has since been sold to upmarket rival Waitrose, whilst Warrington was apparently sold to frozen food rival Iceland. Part of the Bristol depot has been sold off to Gist.[23]

Morrisons store in Morecambe, Lancashire

The store conversion process was completed on 24 November 2005 when the Safeway fascia disappeared from the UK.[24]

In 2007, Morrisons opened a new Distribution Centre in Swindon[25] and announced that it had bought the Gerber Foods site in Bridgwater in Somerset, for redevelopment as a fresh produce packing facility.[13]

Alcohol sales controversy

Since 2007, Morrisons has struggled with negative publicity over alcohol sales, as it has alternated between extremes of zeal and laxity in implementing its policy of asking anyone who appears to be 25 or under and is purchasing alcohol to prove that they are above the legal drinking age. First, the BBC reported in September 2007 that a Morrisons store in West Kirby, Wirral, had refused to sell two bottles of wine to a 72-year-old grandfather of three because he refused to confirm that he was over 18.[26] Morrisons refused to admit that a mistake had been made, explaining through a spokesman that "To [...] limit any element of doubt staff at the West Kirby store are required to ask anyone buying alcohol to confirm that they are over 18."[27] Next, in September 2009 a Morrisons in Knottingley, West Yorkshire, was caught in a police sting and the company was fined for selling alcohol to a 15-year-old girl.[28] Two weeks later, The Guardian published an article on Jackie Slater, a woman in her 50s who had been refused a sale of a bottle of wine while shopping with her 17-year-old daughter.[29] Again Morrisons stood by the store's action, explaining through a spokesman that "stores are unable to sell an alcoholic product to a customer they believe could be buying for a minor or for someone who is unable to prove their age."[30] The checkout assistant involved in the incident, however, told The Guardian that Mrs Slater would have been allowed to buy the wine had she been shopping with younger children.[31] This prompted Leeds North West MP Greg Mulholland to comment that "Morrisons should be ashamed of themselves", and that "Whoever thinks this policy will do anything to stop antisocial drinking by kids is in cloud-cuckoo-land."[32]

Senior management

In 2008 Sir Ken Morrison retired from the Company.[33]

Dalton Philips is the current CEO, replacing Marc Bolland who left to become CEO of Marks & Spencer [34]

Current operations

Morrisons in Reigate, Surrey
A Morrisons petrol station in Hunslet, Leeds

Morrisons currently has 403[35] superstores in the United Kingdom (September 2009), including those it retained following its purchase of Safeway plc (see below). Until 2004, Morrisons superstores were largely concentrated in the English Midlands and the North of England, but had expanded southwards, beginning with a store at Erith, Greater London, which opened in 1998.[36] Most Morrisons stores operate from large superstores with a core focus on groceries and homewares, with fewer electronics, clothing and furnishings than the company's main supermarket rivals.

Morrisons supermarkets are currently split into 6 areas of the UK. Scotland (51), North (72), Midlands (75), South East (63) with one of these in Gibraltar, South Central (62) and the South West (51).

Unlike its major competitors, Morrisons does not offer an online grocery home delivery service, neither does it offer any kind of loyalty scheme.

According to CACI, as of 2006, Morrison's has market dominance in 10 postcode areas; SY (Shrewsbury), LD (Llandrindod Wells), WS (Walsall), TS (Cleveland), TD (Hawick), BD (Bradford), HG (Harrogate), LS (Leeds), WF (Wakefield) and HD (Huddersfield).[37]

Purchase of former Co-operative and Somerfield stores

When the Co-operative Group completed its takeover of the Somerfield supermarket chain in March 2009, it was required to sell a number of stores by the Competition Commission. Morrisons purchased 35 stores from the combined group, mostly trading under the Somerfield fascia.[38] These new stores are the first of more than 100 identified by Morrisons for expansion into smaller supermarkets as it aims to have a store within 15 minutes of every UK home.[39]

Financial performance

52/3 weeks to Turnover (£'m) Profit/(loss) before tax (£'m) Profit/(loss) after tax (£'m)
1 February 2009 14,528 655.0 460.0
3 February 2008 12,969 612.0 554.0
4 February 2007 12,462 369.0 247.6
29 January 2006 12,115 (312.9) (250.3)
30 January 2005 12,116 193.0 105.0
1 February 2004 4,944 319.9 197.6
2 February 2003 4,290 282.5 186.3
3 February 2002 3,915 243.0 143.7
4 February 2001 3,496 219.1 120.0
29 January 2000 2,969 189.2 103.1
Morrisons store with clock tower, Doxford Park, Sunderland

Market share

According to TNS Worldpanel, Morrisons is the smallest of the 'Big Four' supermarkets with a market share of 11.1%. Whilst Tesco, Asda and Sainsbury's saw increases in market share from July 2008, Morrison's saw a similar sized decrease of 0.2% in the same period.[40]

Supermarket Consumer
Spend (£000s) 		Market Share
August 2008 		+/- from
July 2008
Tesco 6,351,531 31.6% Increase 0.3%
Asda 3,410,431 17.0% Increase 0.1%
Sainsbury's 3,175,543 15.9% Increase 0.1%
Morrisons 2,233,137 11.1% Decrease 0.2%

Marketing and branding

File:Morrisonsoldlogo pre2007.png
Morrisons logo used 1985-2007

On 15 March 2007, Morrisons announced that it will ditch its traditional branding and strapline in favour of a more modern brand image. CEO Marc Bolland announced: "Reflecting our nationwide presence and our many new customers, we will be making Morrisons the food specialist for everyone".[41]

The change will see the replacement of the current logo and the "More reasons to shop at Morrisons" strapline, replaced with "fresh for you everyday" or "fresh choice for you" and "Food specialist for everyone". It will also involve the replacement of external signage, as well as changes to product packaging, point of sale, advertising, staff uniforms (replacing the old blue ties and bows to green ones) and distribution vehicles. The rationale behind the decision is the need for Morrisons to attract a wider national customer base, capitalising on its expanded geographical spread following the acquisition of Safeway.[42]

File:Speke1.jpg
The New Morrisons at Speke

On 23 July 2007, Morrisons officially launched their new look website as well as their new advertising campaign. Their first TV advertisement under the "Fresh Choice for You" slogan appeared. This showed Denise van Outen travelling all over the country, and out to sea, with a Morrisons trolley, searching for sources of the finest ingredients. She then returns to Morrisons where everything is made freshly on Market Street. The soundtrack for the advert is Take That's song Shine which is also accompanied by a voiceover by Jim Broadbent. This is the start of a series of new adverts that will feature a range of different celebrities who will each promote the store. The new advertising campaign also unveiled a change to the new slogan, which is now "Fresh Choice for You".[43]

Morrisons at Wetherby, West Yorkshire

Distribution

In 2005 Morrisons purchased part of the collapsed Rathbones Bakeries operation for £15.5 million which make Rathbones and Morrisons bread.[44]

Awards

Morrisons in Wellington, Shropshire

2009

  • Retailer of the Year[45]
  • Multiple Spirits Retailer of the Year[46]
  • The Grocer 33 Best Availability Award[47]
  • The Grocer 33 Best Service Award[47]
  • Store Manager of the Year[47]

2008

  • Retailer of the Year[48]
  • Grocer of the Year 2008[49]
  • Supermarket of the Year 2008[50]
  • Store Manager of the year 2008[50]
  • Fresh Produce Retailer of the Year 2008[50]
  • Fresh Flower Supermarket of the Year 2008[50]

2007

  • Fresh Pasta Retailer of the Year[51]
  • Frozen Pizza Retailer of the Year[51]
  • Supermarket Greetings Card Retailer of the Year[52]
  • Fresh Flower Retailer of the Year[53]
  • Training Initiative of the Year[53]
  • Store Manager of the Year[53]
  • The Grocer Customer Service Award[54]
  • The Grocer Best Availability Award[54]
  • Grocer Own Label Excellence Awards[55]
  • Seafish Quality Award for all their Fresh Fish and Seafood counters[5]

2004

  • Store Manager of the Year[5]
  • Retail Product of the Year Award, Morrisons ‘Classic Walnut Dream Ice Cream’[5]
  • Retail Week – Retailer of the Year[5]
  • OLN Drinks Retailing Awards - Multiple Drinks Retailer[5]

2003

  • Fresh Pasta Retailer of the Year[5]
  • The Grocer Gold Award for Availability[5]

2002

  • Fresh Pasta Retailer of the Year[5]
  • Multiple Beer Retailer of the Year[5]

2000

  • Multiple Retailer of the Year, Retail Industry Awards[5]
  • Off Licence Retailer of the Year, Retail Industry Awards[5]
  • Multiple Retailer of the Year, Off Licence of the Year Awards[5]
  • Pizza Retailer of the Year[5]
  • Best Supermarket Fish Counter[5]
  • Gold Award, ‘Winning Business’ magazine's Retail Customer[5]
  • Service Survey – the only retailer to be awarded ‘Gold’[5]
  • Best Large Retailer, Disability Customer Service Awards[5]

1999

  • Fresh Produce Retailer of the Year[5]
  • Off Licence Retailer of the Year[5]

See also

References

  1. ^ a b c d Morrisons' Annual report - 2009
  2. ^ Co-op buys Somerfield for £1.57bn
  3. ^ Snapshot of the market - november 2008
  4. ^ Morrisons set to name next supermarket head
  5. ^ a b c d e f g h i j k l m n o p q r s t u v w Student pack
  6. ^ Morrisons seals Safeway takeover
  7. ^ Morrisons faces investor revolt
  8. ^ Morrisons plunge deep into the red
  9. ^ Morrisons face strike action over supply chain IT
  10. ^ Safeway glamour gives way to Yorkshire Bitter
  11. ^ Waitrose snaps up Safeway stores
  12. ^ Struggling Sainsburys buy Safeway stores
  13. ^ a b UK Business Park
  14. ^ Morrisons sells 114 Safeway shops
  15. ^ Asda moves into Northern Ireland
  16. ^ Waitrose adds 5 more stores to its empire
  17. ^ Waitrose buys more stores from Wm Morrison
  18. ^ UK Business Park
  19. ^ CI Traders buy Safeway
  20. ^ Morrisons pull out of Isle of Man
  21. ^ Friends of Gibralter Heritage Society
  22. ^ Morrisons staff announce walkout
  23. ^ Dematic
  24. ^ Safeway disappears after 43 years
  25. ^ Depot strengthens Morrisons in the South
  26. ^ Man, 72, refused alcohol over age
  27. ^ Man, 72, refused alcohol over age
  28. ^ Morrisons store caught in Yorkshire under-age booze sting
  29. ^ Mother is refused wine at Morrisons – in case daughter, 17, drinks it
  30. ^ Mother is refused wine at Morrisons – in case daughter, 17, drinks it
  31. ^ Mother is refused wine at Morrisons – in case daughter, 17, drinks it
  32. ^ Mother is refused wine at Morrisons – in case daughter, 17, drinks it
  33. ^ Sir Ken Morrison, 76, bows out to applause and sales gift
  34. ^ WM Morrisons Board Member Biographies
  35. ^ 'Our stores', Morrisons website
  36. ^ Morrisons sail into Southern supermarket battle
  37. ^ "Tesco 'top' in more parts of the UK". BBC News. 11 October 2006. Retrieved 2008-05-22.
  38. ^ The Guardian, 4 December 2008
  39. ^ The Guardian, 13 March 2009
  40. ^ Market share - August 2008
  41. ^ The Grocer Today - Latest News | www.thegrocer.co.uk
  42. ^ 20/20 rebrands Morrisons - Design Week
  43. ^ Morrisons has fresh choice for you
  44. ^ Morrison buys Rathbone Bakeries
  45. ^ Morrisons wins Retailer of the Year for second year running
  46. ^ Drinks Retailing Awards: Finalists
  47. ^ a b c Grocer Gold Awards
  48. ^ Morrisons scoops retailer of the year award
  49. ^ Morrisons crowned 'Grocer of the Year 2008'
  50. ^ a b c d Morrisons crowned supermarket of the year
  51. ^ a b Morrisons is top of Italian Cuisine
  52. ^ Awards greeting cards winners
  53. ^ a b c Morrisons is first for flowers
  54. ^ a b Morrison is customer service champion
  55. ^ Morrisons products scoop top industry awards
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