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Putting the 'M' in Local?
The launch of the new 'M-local' format last month marks the latest big change at Morrisons since chief executive Dalton Philips took charge last year. More than just a new concept, it is indicative of a fundamental transformation within the busines as it looks to new strategies, such as online and convenience stores,in order to close the gap on its Big Four rivals. ELIZABETH TROAKE investigates.
It cannot be denied that Morrisons seems to have come a little late to the party when it comes to flexible store formats, with Big Four rivals Tesco and Sainsbury's having seen the convenience store light some years ago. However, with M-local the company that has traditionally been seen as the UK's 'other' supermarket behind Tesco, Asda and Sainsbury's respectively is beginning to give its competitors something to think about.
The move makes sense for Morrisons. For a number of years, convenience store retailing has been one of the fastest-growing markets out there, consistently outperforming the total grocery sector. Moreover, experts at food and grocery analysts IGD predict that sales will rocket from £32.4 billion to £42.3 billion by 2016.
It is a market that Morrisons' chief executive, Dalton Philips, (pictured right and overleaf) has been keen to get the company into since he took over as chief executive from Marc Bolland in 2010. In the company's half-year results in September last year; Mr Philips referred to the "many opportunities ahead to drive our top line, increase efficiencies in the business and to capture growth."
His flagship plans were to move Morrisons into online food retailing, which he believes noone has "cracked" yet and the convenience sector. In the company's 2011 report, Mr Philips said: "The grocery market is changing, with customers seeking alternative and complementary channels. Convenience stores and online shopping are the two fastest-growing sectors of the market and developing our offer in these channels will be another focus of our future strategy. We will look to do this in a way that is uniquely Morrisons and in a way that makes us 'Different and Better than Ever'." Mr Philips has taken his time over the launch of M-local, sending the company's top executives to the US and Asia examining and analysing different convenience store formats, according to the Financial Times, in the hope of coming up with a successful concept that will play to Morrisons' strengths.
Rather than offering a condensed supermarket range at higher prices, the stores will have a strong focus on fresh food at "competitive prices", bringing a local "artisan" store feel back to the British high street.
Mr Philips has said in the past that he believes the company's success and point of difference is its so-called "vertical integration", the fact that it owns all its own factories, as well as the fact that many products are made instore. In fact, if categorised by food sales alone, Morrisons would be the second-largest retailer in the UK.
The M-local range will capitalise on this, by including a minimum 100 lines of fresh fruit and vegetables as well as a "strong presence" of fresh meat, fish and bakery goods. These products will move quickly from preparation to sale, more so than in other convenience stores says Morrisons, as they will be prepared "little and often" by "skilled craftsmen and women" at anearby full-format store. The company has also said that it will not include a price premium on fresh products and has even gone so far as to anticipate that M-local fresh products will be 4-11% cheaper than other convenience stores.
Finally, after rigorous research, the first of three trial stores opened on July 8th in Morrisons' Yorkshire homeland, preceding two further sites reported to be in Manchester and Liverpool, which will open later this year. Situated in the lucrative spa-town of Ilkley, Yorkshire, it is on the very doorstep of Morrisons' hometown of Bradford, as well as being in thecommuter belt for both Leeds and Harrogate. At just under 3,000 sq ft, the current store is a former college building that has been recently refitted. Based on the company's green and yellowbranding, the store will open at 6am and close at 11pm, seven days a week.
The traditional high street store vibe has been carried into the design of the new store, thanks to retail design agency Fitch. Alasdair Lennox, creative director of Fitch, commented: "Our key customer insight was that the British public do not believe thatsmall convenience stores can genuinely deliver fresh fruit and veg or bake fresh bread, even though we would all love to have this on our street corner. Fitch's principle design challenge was to create a retail proposition and expression that positions M-local as 'Daily Market Fresh' to match Morrisons' operational model, as opposed to its competitors which generally offer 'Supermarket Fresh.'"
According to Fitch, the interior design embodies the "atmosphere of a marketplace" with clear lines of sight, use of tile-work, exposed architecture and natural materials, such as wood and wicker. It will offer constantly replenished products, with food placement and selections changing according to the time of day.
On the day of the launch, the company was keen to emphasise the fact that, despite a departure from its current format of stores, the new concept would remain unique to Morrisons'
ethos: "Morrisons is known for excellence in fresh food and intends to make fresh food front and centre of its convenience offer, leveraging both our vertically integrated model and our
skilled bakers, fishmongers and butchers to produce an offer that stands out."
Mr Philips added: "Convenience is one of the fastest-growing sectors of the market and developing our offer in this channel is a key part of our growth strategy. We believe that convenient food doesn't have to mean dull food. The M-local offer will be different: a greater emphasis on fresh food and, critically, the same competitive prices for fresh food in M-local as in Morrisons will really set us apart from the competition. I'm confident that customers will find the M-local offer compelling and different and I look forward to hearing their feedback."
Local feeling seems to be amenable towards the new store, with users of local online forums such as www.ilkley-more.com generally expressing interest and approval. Indeed, the launch has already had a minor PR victory in Morrisons' battle with its bigger rivals. According to the Yorkshire Post, the new launch will put Morrisons head-to-head against Tesco, which has run into controversy with plans for its new Ilkley store following protests from local residents.
With Sainsbury's currently operating approximately 300 convenience stores and Tesco well over 1,000, it would take a certain amount of delusion to imagine that Morrisons will be equalling the scale of its rivals' operations any time soon. The smaller company's strategy of building on its USPs and creating a fresh-food store that combines the consistency of a chain with the fresh produce of an artisan provider may just get people excited.
