Specialist
Former Director, Group Retail & Logistics at WM Morrison Supermarkets plc
Agenda
- Morrisons' (LON: MRW) price positioning vs the big four and discounters
- Store footprint and expansion opportunities
- Morrisons' supply and margin sustainability
- Growth opportunities, including online penetration and Amazon Fresh partnership
Questions
1.
Could you highlight some of the key trends within the UK grocery retail sector in Q4 2020? How do you expect the sector to trade through the current lockdown?
2.
You said you expect online to keep growing. At what percentage might online penetration normalise in 2021 and where could that trend over the next three years?
3.
Has there been much disruption from Brexit over the last few weeks?
4.
How would you assess Morrisons’ growth through the various UK lockdowns and through the start of Q4 2020 up to now vs the broader UK grocery retail market?
5.
Morrisons’ unique model means it’s very vertically integrated. Do you think this has helped it through the supply issues experienced by businesses in the industry during the initial lockdown and does this give it an advantage?
6.
You mentioned Morrisons gained some market share amid the coronavirus. Do you think that share was taken from the rest of the big four or from companies within the wider UK grocery retail market, such as the discounters?
7.
Why do you think Morrisons has had slightly more protection from market share loss to discounters than the rest of the big four?
8.
Do you expect Morrisons to outperform the market in the long term, given its fresh food participation, which the discounters don’t have and Tesco abandoned? It seems to be an important differentiator for Morrisons.
9.
Does local and fresh food participation come with any risk for Morrisons? Is this a profit pull for the company or is it able to charge higher prices and keep profits where they need to be?
10.
Could you break down the penetration of Morrisons’ main operating segments, including food, non-food, clothing and alcohol?
11.
How is Morrisons able to improve margins with its cafes? Is it just by creating a more premium space and then using its own vertical integration and directly sourcing from manufacturers?
12.
Do you think the discounters can take any more market share from the big four? Where do you think the ceiling is for market share gains?
13.
Where do you think Morrisons is situated on the pricing ladder? Is Asda typically its biggest price competitor?
14.
Do you think that the quality of Morrisons’ products reflects the price gap, both up and down? From your previous answer I think you would probably say the quality is above the current price level.
15.
How would you assess Morrisons’ online offering relative to its competitors, including any advantages or weaknesses? You mentioned the growth of online in this sector.
16.
How valuable do you think the partnership with Amazon is for Morrisons? It’s only providing quite a small penetration from its wider UK market. Is there any risk of the partnership being lost? What would that mean for Morrisons?
17.
How critical do you think this Amazon partnership will be in providing visibility for Morrisons as it starts to roll out stores in London? The company has been historically strong in the north of England but has struggled in the south and London.
18.
Could you describe some of the cost-to-serve challenges that Morrisons and the wider UK grocery market have experienced due to the move to online? How has it impacted profitability and costs?
19.
Do you think there’s any one player out of the big four that might outperform in online across the next five years, considering the potential differences in their models?
20.
Could you estimate Morrisons’ private label product sales as a percentage of total sales, and how this might evolve?
21.
How important is private label for getting volume through the manufacturing plant and the store? Along with profitability, do you think there is any major difference between branded products and Morrisons private label products?
22.
Where is the significant growth in Morrisons’ clothing division coming from? What does this mean for the company as a whole and how does it impact the bottom line?
23.
The clothing growth seems to help Morrisons utilise its store space and as you mentioned, online clothing sales are generally slightly bigger ticket items than normal grocery products. Does that help improve the unit economics of online sales for Morrisons?
24.
How do you think Morrisons’ refurbishment project and its store growth project could evolve over the next five years? Do you think there’s a lot of capital outlays required for refurbishment, or could it focus on new stores in the south of England?
25.
Could you estimate the general cost of refurbishing vs building out a new store?
26.
What do you make of Morrisons’ decision not to follow Tesco and others into convenience stores? Do you think this is a strategically good move?
27.
What are the dynamics of Morrisons’ forecourt strategy? Is it significant enough to impact revenue and profits?
28.
What trends could shape the UK grocery retail market across the next 12-24 months? What should we expect from pricing and inflation?
29.
Do you expect a recessionary environment to hinder growth for Morrisons? Conversely, would it not have as significant an impact as it would have done in previous years given its strong pricing position, as well as the coronavirus-related tailwinds caused by more people cooking at home?
30.
Do you think there are any further costs Morrisons can take out of its cost base? How could margins trend for Morrisons over the next 12-24 months?
31.
Do you think Morrisons’ management are the right team to lead it through this next phase of growth?
32.
Could you highlight any key risks that we haven’t spoken about that could lead to market share decline for Morrisons?
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