Findings of Research
Morrisons is currently one of the UK’s top 5 supermarket chains, with more than 450 stores nation wide. It has many different types of goods including both well known brands and own label products. Their aim is to provide all of their customers with the very best value for money no matter where they live and uniquely, they have always charged the same prices in every one of their large stores. The nature of Morrisons is to compete with its rivals to gain a greater market share. Morrison uses their unique policy of in house workings to help them gain market share over their major external rivals such as Tesco and Asda Wal-mart. Morrisons compete in a highly competitive market where it is becoming such an environment for big business it is hard for new comers to break through. It is a hostile market where each chain has to try and out do the others in not only service but price, quality and value for money. This has meant each chain has to create its own identity and image to differ it from its competitors. As well as this each store has to establish a link with its surrounding community with rival companies having store geographically close to each other, the stores themselves have to create there own identity in the community as well as up keeping the image of the company. This is done by such things as fund raising for charities and helping the surrounding community e.g. employ local workers. Despite this ever changing environment Morrisons have managed to gain greater market share year by year coming up form being a midlands and northern England supermarket chain to a national one. How Morrisons have achieved this it to gradually expand their business bit by bit, one area at a time. This has allowed them to slowly build up there chain and at the same time appear as a low concern to it’s, at the time, future major rivals. By establishing a solid base in the middle and north of England Morrisons gave themselves a good point to start expanding. By becoming a dominate supermarket in this region only it allowed them to gain a great market share for that region and give them a good reputation to start going national. One thing that has set morrisons apart from its competitor is its use of in house resources, morrisons has prided itself on the fact that they personally have over seen nearly every part of the process of there products form selection to preparation to them being put out on to the shelves. This has been one of Morrisons major characteristics of their identity they have played on the fact that they know were their stock has started and how it got there. This has been a key factor to Morrison’s image that they project. Morrisons have used the image that they are a local store and very traditional this is reinforced with there use of in house management. For example; having trained butchers in store handling the stock that they have processed and transported themselves like what you would expect from a traditional butcher shop. This theme carries around the store in to its many departments such as their bakery, fishmongers and delicatessen. Morrisons have called this service market Street, they have taken a collection of individual fresh food shops and focused on personal service and tried to incorporate traditional craft skills into a modern day supermarket environment. Morrisons have structured their stores in the typical pyramid style with the board of directors at the top building outwards and downwards to there huge shop floor workers base. Morrisons have a 15.6% share in the UK’s grocery market, and is continually growing and is the fastest growing supermarket chain in the UK. They are currently the 4th largest supermarket chain in Britain. This is mainly due to their recent takeover of Safeway. This takeover has allowed Morrisons to gain a great amount of the market all at once and giving them a strong geographic spread all across the UK. Even though Morrisons have taken over Safeway they have currently kept their name on some of the stores mostly in Scotland due to the fact that Morrisons was an unknown company in Scotland until 2004 the year of the take over. Morrisons takeover has pushed the company in to being a top national supermarket almost over night but this could have its down fall if not managed correctly. Morrisons are growing constantly and can take over this market in years to come if they continue having this success, but what has to be watched is that in the pursuit for a greater market share that they do not loose the market share they currently have.
S.W.O.T Analysis and Comparison
Now an S.W.O.T. analysis will be conducted to point out Morrisons Strengths, Weaknesses, Opportunities, and Threats showing how there strategy has and can help them and where it could or has let them down.
Strengths
- Strong In-house resources
- Good reputation
- Fast growth rate up till now
- Good share in the market
- Large number of store, well spread through out the country
- Original Image
- Recent Takeover
There are many strength of Morrisons a rightly so for the fastest growing company in such a hostile ever changing market environment. The major strength of Morrisons lay in the company’s original layout. With them trying to have as much control over their business as possible whether it is in the supermarket itself or in the transport and packing of its goods Morrisons have bestowed upon itself an image that they care about their products which reads to the customer that they care about them. This in turn has given a good reputation which has helped them to grow and expand through out the country. Morrisons original image, original meaning different from other supermarkets, has given them a different selling point to customers, not only does it use the usual strategy of offering value for money and low prices, which is usually the deciding factor in a customers choosing of a supermarket, but they have the ideals of a tradition old fashion shop. They offer there customers what seems like individual services, such as, a butchers, a bakers, a fishmongers, but with the bonus of it being all together under one roof, despite the fact that it is all just part of their shop. It gives the customer the illusion of shopping at their very own butcher or bakers but within a big supermarket were they can get there rest of their groceries. That number of stores that Morrisons now have is a great amount and they seem to be spread very well across the country making morrisons a well know name all over the country this is important for the company cause it will help them to maintain their market share in most areas and help them to pick up more market share in other. The recent takeover of Safeway has allowed is to take more of an effect, with morrisons now increasing its stores in areas it all ready has quite a few reducing its competition in that area, but also helping them to break into new areas such as Scotland and gain a greater market share. Morrisons fast growth is a key reason for its success, not only has the company increase its amount of stores but it has increase it amount of warehouse and processing facilities, this has been one of the main reasons Morrisons has done so well. It has expanded only when it was ready to take on more stock, and not before they didn’t rush into adding more stores until they made sure they had enough resources to stock and supply those stores with out the other stores suffering.
Weaknesses
- The recent takeover
- The speed at which they are currently
- There traditional attitude
- Sudden introduction into unknown area
Morrisons current have a very good strategy and systems in place so its weaknesses aren’t great in amount but there is a few that if not seen to could potentially harm them. Firstly as shown about there recent takeover is listed as a strength but it is also a weakness. The resent takeover of Safeway has given Morrisons a lot of work to do, with the changing over of store names and identity and getting all the right named products on to the selves as well as many other things that need to be done, they have left themselves vulnerable. This takeover could possible leave them open to the other supermarkets stealing their business due to customers feeling uneasy at the sudden change and with the change in produce it will give the other supermarket and chance to poach the customers away from Morrison. The speed at which they are currently expanding to fast this could cause them major problems with produce supply, and delivery to all the new stores. Also if it keeps going at this rate it will leave the company nowhere to go in terms of expansion or at least in this country. The sudden introduction into a new area also leave the company with problems with supply and deliver but also with breaking a new market with there image with out any real prior testing. This could affect one of their major strengths, their reputation.
Opportunities
- The New stores in new areas
- The Safeway name
The new store is the best opportunity that Morrisons has of gaining a greater market share. By using the fact that the brand is new in an area gives it the chance to freshen up the store it has but retain the customer base it had from the previous name. Morrison can use this to impose themselves into this area taking away the market share that it competitions have with in that area. They have the benefit of the fact that the store that have although it is technically new in terms of it being a Morrisons store it is old as a supermarket and has a stead in take of customers already so what they need to do is capitalize on this by integrating their system and image with the already existing store. To do this that can re lunch the store with out it being closed, make it an event and draw new customers in to see how a Morrisons store is different from the average supermarket. Using the existing Safeway name for a while it idea to introduce people to Morrisons it lets them know that it is just like Safeway but they can convey that it is new and improve giving the stores a new lease of life but still keeping the loyal customer base of Safeway.
Threats
- It major competitors
- The Next ‘Morrisons’
- Lack of new ventures
There are one or to threats that can cause Morrisons current success to turn to failure. The most important one is its major competitors such as Tesco and Asda Wal-mart, these companies have been about the top of this market for many year and will know doubtable be there for years to come. They are always looking to improve their business and expand just like Morrisons but they have the added advantage of be established not only all over the country but most of the major ones are established over seas as well. Asda is part of the Wal-mart family which is the biggest supermarket group worldwide so they have quite a lot of resources and new ideas to keep them at the top and to get them all the way to the top. Morrisons other threats is that they may lose customer for a lack of variety of product all under the same roof because currently the other big supermarket have ventured into clothing lines which has allowed them to bring in a whole new type of customer and with Morrisons not offering this type of produce they could stand to lose customers to their main competitors. The other this morrisons need to watch out for is the next supermarket chain on its way up due to fast growth and expansion, local stores such as Spar and Key stores could rapidly expand just the same way they did and start to take away some of their market share.
Now Morrisons will be compared to another company that is similar that operates in the same environment. Due to Morrisons recent takeover of Safeway, probably the best company to compare it with would be Asda Wal-mart showing the differences in their takeovers as well as how they perform in the market. Asda became part of the Wal-mart family in 1999 and since then Wal-mart have made several changes to the Asda stores. Even though they have kept the Asda name the stores themselves have become more American in appearance with the way they are laid out, etc. They have made the stores more all round instead of being just a place to buy the weekly shopping they have made it a place you can get everything done, selling things such as jewelry and clothes, garden furniture, television bikes and sports equipment. It has essentially become a store that you can get everything you may need all under the one roof. Wal-mart has tried to bring part of their American style into Asda but have changed the stores in such a way that the customers wouldn’t notice. They have introduced new systems which have helped Asda to keep up with the other supermarkets and help them to retain their market share, they also introduce what Asda calls rollback which is one of the main catalyses of the supermarkets price wars that took place and is still going on. Rollback is a simple process of were they reduce the price on so many top brand and own brand produces for a set period of time, a bit like a special offer, but to the customer they advertise it to seem to be permanent so it forces other supermarkets to drop their prices till they can’t afford to. Morrisons on the other hand has takeover another British supermarket chain so there for they do not need to make any major cultural changes. It may be a note of interest that Wal-mart tried to takeover Safeway as well but failed in their bit due to a government intervention, the government thought if they had taken over Safeway they would begin to monopolize the market so they where there for legally not allowed to takeover Safeway which allowed Morrisons to. Morrison have opted to do things differently because they are going to completely remove the name of Safeway and replace it with Morrison this is so they can be known by the same name all round the country. Morrison operation is smaller than that of Asda Wal-mart but it is just as effective, they play on their strength well enough to keep their share of the market and try to use this extension to gain more. However their tradition way of thinking and processes will cause them problems as time moves on they will need to up date their systems constantly to cope with their constant growth and this will slow them down considerable and could cost them part of their market share. However Asda Wal-mart have a brand new system in place and are currently using the stores they have to gain a greater market share and this should allow them to gain an advantage over Morrisons but other competitors as well standing them in good stead to take the lead in the market. Morrison still are going through their take over and this could leave them with problems and loss them part of their market share but when it is complete it should make them an even greater presence in such a hostile market.
Recommendations
For the future of Morrisons it is most important for them to look at the resources they have and make sure that they can cope with constant expansion that they seem to be going through. They need to slow down their growth rate because if they become too big too soon they might end up causing problems for themselves. They need to look at the amount of store they have and see if it is worth cutting back so that they don’t have too many store all in the one area. Looking into new ventures is probable the best recommendation to give. It is essential that they keep up with their competitors on all fronts this way they minimize their risk of falling behind and losing out to them. Clothes are the next big step for Morrisons it is becoming an essential part of a supermarket knower days. It would be best for them to start off in the bigger store the ‘super’ store as it were and then expand it out to the smaller store once it is established and doing well. Keeping a look out for the next fast growing company in the market and ensure that they don’t repeat what they have done and take some of their market share. The major thing for Morrisons to do over the next year is to learn how to retain the market share they have instead of always trying to add to it, retention is the key to them staying near the top and giving them the ability to get all the way up to the very top. If they can learn how to retain their current market share it will help them once they have gained even more and have no place else to go but down.
References
Cole, G. A., Management Theory and Practice, sixth edition
The Retail Concept of the Supermarket, Leeds University
Newspapers
Julia Finch, city editor, “Morrisons' duo determined to deliver”, , Date: September 8th 2004
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