With seven consecutive quarters of growth under its belt, the turnaround at Morrisons is in full flight. For the first six months of the year, its pre-tax profits jumped 40% to £200m while like-for-like sales rose 3%.
Morrisons has prospered by creating a consistent price strategy and prioritising its fresh food offer in-store. It has also been boosted by its deal to supply Amazon Fresh with own-label products, with the partnership leading Morrisons CEO David Potts to confidently claim he expects to make £1bn of wholesale supply sales “in due course”.
But what about its marketing? Since appointing Potts in February 2015, Morrisons’ advertising has moved away from the celebrity-driven tactics of the past (when Ant and Dec were brand ambassadors) and prioritised its basic brand values – such as low prices and fresh food made on site – instead.
Its TV ads have been careful not to stray too far away from Morrisons’ position as a foodmaker and greengrocer via the ‘Morrisons Makes It’ branding, only really doing so to reiterate its ‘Price Crunch’ strategy to fight against the discounters. All of the ads under Potts’ reign have also consistently featured Morrisons colleagues.
The latest features shoppers and 23 real-life Morrisons staff dancing in unison to Elvis Presley’s Way Down’to celebrate the supermarket brand’s price-cutting strategy. And speaking to Marketing Week, Andy Atkinson, group customer and marketing director at Morrisons, says putting colleagues at the heart of its advertising has aided its turnaround.
“About two and a half years ago, the big customer learning was that they wanted us to celebrate our colleagues and the fact they were shop keepers,” he explains. “Subsequently, they have been in all our ads since as they represent our brand so brilliantly. This turnaround is colleague-led so they provide the boost and inspiration for all the marketing I am creating.”
Food inflation was 3.2%, compared with 3.3% in the previous period, during the 12 weeks to September 10. And according to Kantar Worldpanel, this is costing Brits an extra £100 a year when it comes to buying groceries.
Atkinson believes this plays into Morrisons hands due to its positioning as a “value grocer”. He explains: “We are committed to becoming more competitive and our route to do that is through crunching prices. We are doing well right now because we are selling more food, so that brand commitment to Price Crunch will continue.”
Retail data also suggests tighter budgets are resulting in consumers buying fewer big brands. Subsequently, spend on supermarket own-label products rose 5.5% year on year in the three months to 9 September, according to analysts at Nielsen.
Atkinson says Morrisons has acknowledged this trend. “If you look at our own-label brands then our premium ‘The Best’ range is up 35% year on year in sales volume, our free from range is about the same level. Our fashion brand Nutmeg, when you exclude womenswear, has sales up over 20%. Customers like our sub-brands right now so it’s important that lot of our marketing links back to them.”
And when it comes to the Amazon deal, Atkinson says it’s not only building up its wholesale business but also doing a good branding job for Morrisons. He explains: “Getting the brand to more people in places where they can’t obviously get to a Morrisons store is really good news and important for us. We want the brand to be consumed by more people and Amazon helps us get to more virtual baskets and a larger virtual audience.”
With Christmas just over three months away, Atkinson is currently preparing Morrisons’ festive above-the-line activity. And he predicts this year will be more about value than previous years, with Brits looking to get a good deal on food and drink. He concludes: “Traditionally customers want to treat themselves and trade up at Christmas, but I have no doubt value will be a huge component of that this year.”
Posted and presented by Simon Clegg of Right Prospect Ltd