Fresh blow as Morrisons swings axe

By MARTIN FLANAGAN
Published on 09/11/2012 03:02

MORRISONS ousted its commercial director Richard Hodgson yesterday amid City concerns that the supermarket group is driving away core customers by expanding its upmarket offering.

Analysts said the loss of another senior director at Morrisons came as the group was being squeezed on the sales front between its three big rivals, Tesco, Sainsbury and Asda, and smaller cut-price competitors like Aldi and Lidl.

The company, with nearly 60 stores and a 15 per cent market share in Scotland, said Hodgson – recruited for the commercial role from Waitrose two years ago – would leave immediately.

His exit follows that of Morrisons’ marketing and operations director Richard Lancaster last April. Then the group said finance director Richard Pennycook would leave the business next June after eight years at the firm.

Dalton Philips, group chief executive, said Bradford-based Morrisons had to do a better job of getting its selling points across to customers.

He cited the company’s emphasis on in-store butchers, bakers, fishmongers and greengrocers and its focus on producing much of the food it sells.

“I don’t see us stepping up further our promotional campaign,” he said, “I see us stepping up further the communication of why we are so different from the rest of the pack. I don’t

believe we’ve been getting that message over strongly enough.”

Like-for-like at Morrisons stores open over a year, excluding fuel, fell 2.1 per cent in the third trading quarter to 28 October. That was slightly worse than City forecasts of a 2 per cent decline, and a deterioration on the 0.9 per cent fall in the first trading half.

Some analysts have suggested Morrisons is partly suffering due to its lack of an online food offer, which it is trialling at a US subsidiary, and only a nascent convenience store operation.

But Philip Dorgan, retail analyst at Panmure Gordon, commented: “We think the relatively slow roll-out of new format stores and online are red herrings. Morrisons is underperforming because it needs to do its day job better.”

Clive Black at Shore Capital said Morrisons “has re-engineered its proposition in a way that, for whatever reason, is ‘disenfranchising’ its core customers. That change implies a move too far too soon from its value roots”.