Morrisons supermarket announce plans to restructure the business after a £176 million loss for the year to February.
Competition from other supermarkets, including Lidl and Aldi who have both seen increased profits and sales over recent months, have put pressure on the supermarket chain.
Chairman, Sir Ian Gibson said; “In trading terms this has been a disappointing year for Morrisons, with consumer confidence and market conditions continuing to be challenging.
They launched an online delivery service in January through Ocado, covering 20% of UK households. But most competitors already offer online delivery. As a result, some commentators have asked were they too late to the party? They opened ninety Morrisons Local stores last year, smaller versions of the supermarket aiming to provide essentials similar to a traditional convenience store. Again, some have said this has come too late, with Tesco and Sainsbury’s already dominating with more ‘express’ stores around the country. But with one hundred more Morrison Local’s planned to open this year they could soon be catching up.
As part of the restructure, Morrisons plan to sell off Kiddicare, their baby products business purchased in 2011. Also, they plan to sell their stake in Fresh Direct, a New York food retailer. They revealed plans to lower prices, introduce more targeted promotions and a loyalty card scheme to identify customer shopping habits.
Chief Executive, Dalton Phillips commented on the restructure; “The strategy we are announcing today is a bold and comprehensive response to the fundamental structural changes that are taking place in grocery retail.”. He went on to say; “We’re taking the bold decision to ensure that we are giving our customers the very best price.”
They announced plans to lower prices and target the market between discount supermarkets, such as Lidl and Aldi, and the ‘big four’ to offer great value, quality products to its customers.
The problems highlighted by Morrisons are challenges faced by all supermarket groups big and small. As there is increased competition from other supermarkets, changing shopping habits and customers increasingly shopping around for the best prices. The entire supermarket sector fell in the FTSE 100 with Sainsbury’s falling 7.5%, Tesco 4% and Marks and Spencer 2%. There are lessons other retailers can learn from Morrisons for the whole industry. Information taken from BBC business news.