Morrisons online and convenience stores - the great catch up

The supermarket business is a fascinating one. People have short memories but I can remember walking into supermarkets that just sold food. In a relatively short space of time UK supermarkets have grown significantly in size, products and profits. You can now buy everything from pharmaceuticals to clothing to homewares to technology and music. In food itself they have created own range labels, chilled food and whole new ways of buying alcohol. In a relatively short space of time they have changed our high streets.

Continuing this growth, which delivers the profits that keep shareholders happy, is difficult and needs constant innovation. Supermarkets moved to online retailing as a new route to grow. Then, having taken things away from the high street, the supermarkets are now taking them over as well. Our papers are often filled with news of campaigns to stop another supermarket store opening, especially the new high street based convenience style stores such as Tesco Express Sainsbury’s Local. So while three of the top four supermarkets have driven ahead with online services and convenience outlets, one has been conspicuous in its absence; Morrisons. 

Morrisons is not having a great time at the moment. It has recently posted a 7.2% fall in pre-tax profits to £879m for the year to 3rd February. This is its first fall in full-year profits for six years and like-for-like sales were down more than 2%. As part of this announcement its Chief executive Dalton Philips announced that it is pushing ahead with rolling out its new convenience stores and, more importantly, it will finally launch an online offering.

With both of these areas they are playing catch up. They have already opened 12 “M” branded convenience stores, have bought 62 other sites from the administrators of HMV, Blockbuster and Jessops and want 100 opened by the end of this year. As a comparison Sainsbury’s has over 500 of its ‘Local’ convenience stores already.

However it is online where they really have been caught out. Online food shopping is growing at about 20% per year and Tesco, Asda and Sainsbury’s attribute it as a source of strong growth for them. While the announcement from Morrisons is not surprising there is a question of what took them so long. It now hopes to have an operation in place by January 2014 and announced that it has been talking to online food operation Ocado about sharing technology and knowledge to help it achieve that.

Learning from others’ mistakes is fine but playing catch up in a market that is moving so quickly is extremely difficult. Morrisons does not have a loyalty card like the Tesco Clubcard which uses data from that to populate its online offering with what a customer normally buys in store. In this game they have proved that big data matters. Where they might have an edge is in m-commerce with Ocado reporting that 28% of its orders are from mobile devices.

Morrisons is a long way from its first store opened in Bradford in 1961 by Sir Ken Morrison and one of the PG Tips chimps who cut the tape. Whether these new initiatives are the right thing to do is not in question; whether they have left it too late is another though. Hopefully partnering with experience, especially with someone with experience in the biggest growth area of mobile will give them the kick start they need to catch up.

Tim Youngman is head of digital marketing for Archant @timyoungman

The horsemeat scandal – PR and brand opportunity? Every little helps.

While tax avoidance creates a certain level of emotion in people the thought that you might have been eating horse, well that’s another story. The horsemeat scandal has created brand issues way above what was seen last year. People still bought Christmas presents through Amazon while tutting at what tax they had just helped them avoid. The thought that you might have eaten something you thought was beef and actually could propel you to glory at Newmarket, different matter.

The two areas that I have found most interesting is how those affected companies have reacted and what those outside of the scandal are doing to capitalise on it. While most of the supermarkets have been affected and long standing brands like Findus have borne the brunt, I want to focus on the reaction from Tesco for the first part of my interest.

From an online point of view, Tesco has taken the brunt of the mentions regarding this scandal. It has far outstripped the other supermarkets and even Findus in online news coverage and social media mentions. With this in mind it probably has the biggest mountain the climb to regain the potential knock to its consumer confidence. What it has done so far though has been quick and effective.

Rather than spreading the blame everywhere but themselves, they apologised quickly and announced investigations. This was quickly followed by a series of announced measures clearly communicated to its consumers especially online through email. This communication was personalised and came from the top, all from the group chief executive, not delivered from an unknown Tesco PR person.  

The last email sent to me as a clubcard holder came with the clear concise, and in my opinion, excellent subject line “we are changing”. In it they once again admitted guilt and outlined simply and clearly the range of measures they are putting in place to stop this happening again. Compare this to how Starbucks handled the tax avoidance scandal and you have a case study in how to do it well compared to how to do it badly.

The next area of interest is what those outside of the scandal are doing to capitalise on it. The big winners from this are, and will be, local food producers, especially your local butcher. My own local butcher, Archers, has already seen a rise in trade as people move to a source they can trust. Our papers are full of similar stories which personally I find extremely encouraging. However the ability to truly maximise this opportunity I hope that local butchers take some time to think about how they market themselves.

Are they actively promoting providence of their meat, even if it’s simply a blackboard with the farms where it comes from are listed. Are they using this as a way to build a bigger database of customers, especially email addresses, that they can then build an ongoing relationship with? Why not give an offer in return for customer details so people have a reason to share and then send them newsletters with competitions, special offers and even recipes giving these new customers more reasons not to go back to the supermarkets.  

It’s not just butchers that can capitalise on the current shift in consumer mood. All local food producers should now be sitting down and thinking how they can make the most of this situation and grow their own businesses. With some thought and effort they can now tap into an opportunity and as they say “every little helps”.

Tim Youngman is head of digital marketing for Archant follow on Twitter @timyoungman