Morrisons, the UK’s fourth-largest grocery retailer, announced a raft of new initiatives today (9 September), among which included plans to simplify its range.
New Morrisons CEO Dalton Philips said that one of the “opportunities” the retailer will look to exploit centres around simplifying its “complex range”.
Highlighting the balsamic vinegar category, he said: “We have 16 kinds of balsamic vinegar, which is confusing for customers.”
Alongside a broader “simplification”, Morrisons is in the process of testing a new plan to optimise space within one of its stores, where it is reducing the assortment and space devoted to products by between 5-15% – and then using that space to offer new food and non-food products.
Philips said with the space savings, there is a great opportunity for the retailer to expand its offer in health food, including products like gluten free and free-from, as well as ethnic food, non-food and children’s clothing.
He said he is aiming to “simplify the range and make it easier for customers to shop”.
The move echoes steps taken in his previous role as COO of Canadian retailer Loblaw, where late last year, the retailer significantly reduced the number of SKUs it offered. However, the retailer recently announced that it would be relisting around half of the products it removed in June this year.
Speaking about Loblaw’s stuttered range rationalisation attempts, he told just-food: “It takes a lot of skill to be able to carefully edit your range, you need to be sure you have the data to take products out, while not losing customers. But I do know that you don’t need to offer 16 different kinds of balsamic vinegar.”
The move is just one in four instore tests the retailer is currently undertaking as part of Philips’ mission that “If you can’t be the biggest, you have to be the fastest.”
He said he’s “passionate about experimentation” and that you can try something in one store that will have a high impact, make it scalable and roll it out into the rest of the store estate.
Among the other initiatives Philips is studying, such as Morrisons’ move into convenience stores and investigations into online trading, is running four “labs” – around productivity, store revitalisation, fresh food and the aforementioned space scheme.
The “Productivity Lab” is seeking labour efficiencies, including initiatives like using the racks bread is delivered in as shelving, instead of having an employee manually transfer products onto the fixed shelving, moving bananas into hammocks and using live tagging for CDs and DVDs.
Under its “Fresh Lab” initiative, it will begin trialling a number of changes which include a fruit bar, a Classic Kitchen that will offer “homemade meals prepared instore”, Fresh to Go counters that will offer pizzas, baguettes and rolls to order. Morrisons will also test new ranges, merchandising, layouts and messaging.
The fresh trials will run for up to six months and Philips said he is “confident that the lab will deliver a number of scalable initiatives that can be rolled out across our store portfolio, and which will significantly widen the gap to competition on fresh”.
A “Revitalise Lab” will focus on maintenance work, equipment upgrades, improved space flow and modular improvements. He added that with revitalise, when the retailer upgrades stores, it wants to make sure “we give them a more contemporary look and feel; leapfrogging the best of our current stores”.
While Philips was bullish about the retailer’s longer term prospects, CFO Richard Pennycook said the market will continue to be “tight” for the rest of the year, with increased public spending cuts in the coming weeks to reduce consumer confidence even further.
He also said the days of of food deflation were coming to an end, with rising grain and oil prices expected to have an impact on food prices in the coming months.
Shares in the retailer were down 0.65% at BST 15:03 trading at 290.6 a share.