Former executive at Morrison Supermarkets plc
- Key UK grocery industry trends – food inflation and subsequent pricing and margin strategies
- Morrisons’ competitive positioning in an inflationary environment, discussing threat of discounters
- Market share gain opportunities given share loss
- Growth outlook under new ownership and potential avenues
What is happening with regards to cost and food inflation in the UK grocery industry? Are you still seeing inflation continuing to accelerate?
What do challenging inflation impacts mean for the grocery retailers? How are they reacting to the dynamics you highlighted?
How do behavioural changes and price increases translate to the basket mix for the grocers? Obviously, some products will be more impacted and behavioural changes might take those products out the basket.
You mentioned how well-placed the discounters are. Where does that leave Morrisons? Do you see the company losing any customers to downtrading? How loyal are its customers, and will they be squeezed under this environment and look elsewhere?
Could the inflationary environment bring private label brands more into play, especially in consumer perception? If so, how strongly positioned is Morrisons to capitalise on private label exposure?
Morrisons obviously operates very much a farm-to-fork model, completely different to the other big four retailers. Do you think this puts the company at a disadvantage or advantage to managing the inflationary climate, or is it null and void?
You mentioned Morrisons’ model creates shorter-term headwinds made better in the longer term. What do you think this and everything we’ve discussed means for the company’s gross profits and operating margins? Are you seeing some short-term headwinds, or can it move through this?
What’s the likelihood of Morrisons shifting its trading focus away from market share to prioritising improved profitability, given it’s under new private ownership and has quite a leveraged balance sheet?
What might the strategy be for Morrisons’ new ownership, given you touched on the rent payments and a bit of a leveraged balance sheet, longer-term? How can it really extract value and growth in the company, given it may be slightly handicapped with this leveraged balance sheet?
Morrisons has lost quite a bit of share over the past 12 months. Is that purely a factor of the noise around the acquisition, as well as a bit of play on the inflation side? Do you think there are any other factors leading to that market share loss?
Do you think Morrisons can lap up its lost market share over the next 12 months? As you mentioned, it’s quite tough to get back market share. Might the company’s market share stay where it is?
What are the levers available for Morrisons to go after Asda and take share from it? Are there any obvious factors?
Do you anticipate a partnership with Motor Fuel Group, given the ownership link? We’ve seen EG foster something similar with Asda, and it seems to be doing pretty well with the Asda On The Move stores. Is this an opportunity for Morrisons, something you expect the company to ever venture into?
What is your view of Morrisons’ agreement to acquire McColl’s, announced in May 2022?
Is there anything around how the Morrison Daily format is positioned vs the traditional Morrisons stores that we should be aware of, considering there are a bunch of stores coming into the estate? Does it price differently or have a different product mix?
Is there any risk that Morrisons falls into the same trap as McColl’s with running the stores it will acquire, and doesn’t turn them around and get the stores out the rut that McColl’s found itself in? If so, what does it need to do to really turn that rump of stores around?
You mentioned new store openings from the discounters. We know Aldi is looking at the southwest UK, as well as other players such as Home Bargains and B&M. Who’s most impacted with all these openings from the discounters? Is any one big retailer more at risk vs others?
We’ve seen store openings from B&M and Poundland, but also them starting to encroach on more of the retail space. What’s your view of their range expansions and movements into grocery? Are there any core sectors they’re looking to target?
Where does Iceland fit into the competitive landscape? Is the company any threat to Morrisons, given its big frozen food contingent?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary one week trial.
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited