Morrisons is the UK’s fourth largest food retailer and own more than four hundred stores. The company deals mainly in food and grocery. Morrison constantly strives to develop a strategy based on market anticipation, is most profitable and is always customer-centric. The company makes sure to protect and serve its major objectives in the long run viz. ‘increasing efficiency’, ‘capturing growth’ and ‘driving topline’ (Strategy and Culture, 2013).
Of late, Morrisons, one of UK’s largest conglomerate has been facing difficult times. It is now facing very tough competition from competitors such as Tesco, Sainsbury and Asda due to the reasons that Morrisons is way behind when it comes to having convenience stores or having significant presence in the online world. This position of Morrisons has led the Chief Executive, Philips to state that these two are the primary reasons owing to the loss of market share of Morrisons. It has also been observed that international competition from Lidl and Aldi, offering lower prices have made the position of Morrisons vulnerable in the market.
2) After assessing the reasons for the decline of market share of Morrisons we can make suggestions so as to improve its stand in the UK market. First of all, we all are aware of the internet and its powers. Almost all big companies in the UK and infact anywhere round the world have its own website and interact with its customers through the online platform. In my opinion where Morrisons lag way behind is that it has not yet announced itself on the internet. Morrison has been quite a late entrant into this modern communication and interaction channel.
For long Morrisons has been initiating talks with certain software companies such as Ocado to solve this problem and grow its business online, especially. In particular, the solution to the online dilemma is creating and expanding its logistics network. In this paper, we will try to analyse and comment on the way Morrisons handles this dilemma and establishes itself on the web.
2.1) As stated, the company has been lagging in the fast growing areas of convenience stores and online shopping. On the subject of opening convenience stores the management said that its strategy to commence an online food service by mid-January of this year is in progress stage. But the ground realities of the progress have made the investors to think twice.
Morrisons accumulated turnover went up by +6.9% to €16.5bn i.e. operating profit (original) up +11% to £905m. This was evidenced as the Q1 turnover of 2011 a total of thirteen weeks to the 1st of May and sales exclusive of fuel went up by +4.2% not a major change from +2.5% (Morrisons Implications).
In fact, very recently news has come that Morrisons would not indulge into a deal with Ocado. This has raised even more concerns in the customers’ and investor’s minds and also saddened them. Investors were seriously hoping that Morrisons would confirm a deal with Ocado or lend out some facts during its quarterly information. On the contrary they were let down by the company as shares severely fell in early trading. Morrisons shares closed down 2.7% at 288p (Neville, 2013). However, Morrisons has been stating that the strategy to instigate their first online food operation by January 2014 is succeeding. The statement further reveals that negotiations with Ocado, continue to proceed and any further developments will be made public (Neville, 2013).
2.2) Analysts and critics are of the view that Morrisons would find it very difficult to establish itself in the online market without the proficiency of Ocado. Experts are of the opinion that it would cost a great deal more to Morrisons if they opt to work devoid of Ocado and also would require a huge amount of effort and resources.
I personally feel that whether with or without Ocado, it is high time Morrisons go the online way and start online operations. Obviously, it’s easier said than done but to compete and survive in the modern times Morrisons like all other firms has to make its presence felt in the online world. I think Morrison’s should enter into a deal with the most trusted name in the online business in UK i.e. Ocado. The simple reason being the lack of know-how and shortage of experience Morrisons has in the online business scenario.
Morrisons embarked on a broad review of the market and chose a few amongst many applications from Oracle’s suite. These applications included manufacturing, retail, finance, supply chain, warehousing and trading. Morrisons’ has replaced its entire logistical structure and included a new wide area network for its operations. Morrisons’ has completely replaced its active directory, hence entire middleware layer and database layer has been situated. The manufacturing operations of Morrisons’ is not reliant on some third party, rather has self operational supply chain to produce its foods. Morrisons’ production sites account for approximately fourty per cent of Morrisons fresh food trade.
Morrisons is being helped by Wipro Retail to achieve the company targets of distributing effective planning management and delivery of systems of large scales. This change of process is based on the Oracle ERP platform. Such a platform instigates a whole new IT infrastructure in the entire organization. According to Phil Goodwin the Programme Director at Morrisons, the plan was to implement the plus points of the pilot site that was developed. The implementation was to be made as soon as possible. Any shortcomings that were identified by the pilot site were to be removed and try to learn from the previous mistakes. All in all, this process was made to work in advantage for Morrisons focusing on its strengths.
2.3) Morrisons knows that it would have to face many challenges in its quest for market domination in terms of the logistical implications. Where Morrisons has been very successful is that they have kept their aged legacy structure intact and the practice of continuing them in day to day operations. Not only have they kept the heritage structure alive they’ve interfaced them into the new system without interrupting their business. Morrisons proudly claim that none of the alterations in the core programme has had any impact in their capacity to get a customer to a shop and purchase a product.
As to this date, Morrisons has introduced the online versions of information on various aspects of business that include logistics, manufacturing, HR, financials, trading and EPOS/cash office.
Morrisons worked with Wipro Retail to develop routine solutions that required designing and configuring as to Morrisons’ requirements. The software also took care of purchasing, inventory, I-procurement and accounts payable. At present the Oracle system is synchronised with the legacy systems that would eventually be replaced. Cube, Morrisons’ corporate database will also be integrated with and centralised with financial operations of the roll-out.
The upper management at Morrisons is very enthusiastic and proud of its team and the partnership with its allies such as Wipro Retail. Not only is the programme project being implemented but teams from both sides are working in cohesion and coordination to make alive the project and as quickly as possible. There is a constant knowledge transfer and skill sharing taking place at the Evolve project site. Teams from both organizations are almost embedded as one. Morrisons management proudly claim that with the support of internal teams of Wipro Retail and personnel of Oracle Inc., around five hundred employees are making Evolve to run.
A primary goal and a key business principle of Morrisons is to put customer first and foremost. The Oracle personnel team is helping out the management at Morrisons with their specialized software that aims to perform tasks concentrated on labour and non value-added duties. The management at Morrisons vows to concentrate on its primary staff for higher value service and customer centric tasks. Morrisons hopes to uphold its competitive advantage and stakeholder support for continual rise.
According to me, Morrisons is right in approaching and hiring other specialized firms that are big names in the IT field to uphold its competitive advantage. Morrisons, being a very new entrant on the IT and online platform needs as much support and guidance from such firms as Wipro Retail, IBM and Oracle as possible. These companies have proven track records of building customized solutions for their clients and have been extremely successful in their quest. A number of fast food and fresh food companies such as Wimpy’s and Burger King have utilized some of their services and now are global giants in their respective areas. Such are household names in the IT world and a successful and longstanding partnership with them would not only assist Morrisons in achieving their short-term targets but its overall business objectives for sure.
Morrisons looking ahead would soon launch a home shopping and trial in the time to come as part of its development strategy. The conglomerate is also planning to launch more small convenience stores in addition to the three launched in 2011 (A fresh start for your career, 2013).
Morrisons incorporation boasts of its presence across the UK with its stores servicing 24 hours a day, 7 days a week. Morrisons strores situated from the Highlands of Scotland to the southern town of Cornwall and Southampton are managed strategically through regional circulation centres. The job of the logistics department is to make sure that the produce is handled safely all through, bearing all types of weather from ambient to frozen. As is with every successful organization, training of its staff is very crucial for the smooth running of the business. Consequences of mishandling the stock and produce can be detrimental so it is vital that each member of the workforce involved in the operation is appropriately trained (A fresh start for your career, 2013).
Ms Window who is the Training Lead at Morrisons’ Logistics Department, states that its retail division achieved the Royal Society Public Health accreditation in 2010, therefore they have direct know-how of the importance of this expert appraisal. She further mentions that the RSPH paved the way for them to improve their quality of training programmes and make certain that the department succeeds in its goals to send real value to the company as a whole and ultimately to the customers (Zilnyk, 2010).
Morrisons logistical implications are determined to differentiate since it is been seen as the food specialist in the UK. For Morrisons, the accessibility and logistics competence are an important criterion (Morrisons Implications). The core business strategy is enhanced well by its brand image and this is expected to build impetus. Morrisons needs to take care of the fact that to expand and diversify its commercial formats and platforms the need of getting into the online world and also opening of convenience stores has become more and more important.
The management at Morrisons needs not only a sizeable IT infrastructure to manage an array of store sizes efficiently, but Morrisons could also do better if improved processes are available for its store sizes. Such an infrastructure can be provided by the Evolve programme.
In my view, the incorporation must organise a joint supply chain task force that must work together on improving logistical efficiencies. It must ensure to exhibit a layout of expertise to meet up and figure out the needs for a compilation development.
Strategy and Culture (2013), Availble at http://www.morrisons-corporate.com/About-us/Strategy-structure/. (Accessed: 10 May 2013).
Neville, S.(2013). Morrisons says it can launch successful online business without Ocado. Available at http://www.guardian.co.uk/business/2013/may/09/morrisons-supermarket-launch-online-ocado. (Accessed: 10 May 2013).
Zilnyk, A. (2010). Morrisons Logistics Gains Recognition from Royal Society for Public Health: Royal Society for Public Health. Available at http://www.rsph.org.uk/en/about-us/latest-news/press-releases/press-release1.cfm/pid/CAE9D4EE-D8B9-40CE-92B47BF3E66CA347. (Accessed: 10 May 2013).
A fresh start for your career: Morrisons, (2013). Availble at http://www.iwantafreshstart.com/about.asp?division=&divisionID=12&functionID=68. (Accessed: 10 May 2013).
Morrisons Implications. Available at http://www.thequanticgroup.com/retailer_morrisons.htm. (Accessed: 10 May 2013).