Morrisons' sales continue to decline, despite the grocer improving its stores and focusing more on fresh produce. Shoppers are missing the retailer's messages highlighting its "different and better than ever" credentials, and its impressive offer revamps are not being reflected in sales figures. While costs remain tightly controlled, the retailer is facing a fight in the run-up to Christmas 2012.
Although it is up against tough comparatives, Morrisons' Q3 performance is nonetheless disappointing. Total and like-for-like sales have fallen, with the retailer blaming a tough trading environment. However, the performances of competitors Asda and Sainsbury's have been much more resilient, with both growing sales and share as market leader Tesco stumbles.
The blow of commercial director Richard Hodgson's unexpected departure has been lessened slightly by the experience of his interim replacement, Morrisons veteran Martyn Jones. Jones is tasked with addressing Morrisons' main weakness: improving the consistency and communication of the retailer's offer. Morrisons' differentiated market position is not being effectively communicated to shoppers, leaving a gap between investment in improvements and sales uplift.
The rollout of fresh format stores is driving towards its goal of 100 by the firm's financial year end in March 2013. With sales uplift of 4-6% in refurbished stores, it is imperative that the pace of the rollout quickens to mitigate the decline in sales in older stores. The retailer's convenience format M Local is on course to reach 20 stores by March 2013, but with just seven currently trading there is a lot for the retailer to do. London and the Southeast will be the focus.
This expansion, coupled with improved marketing communication, should help Morrisons to reverse its fortunes in 2013 and realize the potential that its strategic direction offers.
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