Morrisons, the UK’s fourth largest supermarket, is ramping up its offer in fresh foods and non-food.
Announcing an 8% jump in first half pre-tax profits to £442m and 2.2% increase in like-for-like sales, Morrisons outlined its three-pronged growth strategy; focused on driving sales, increasing efficiency and capturing growth.
Fresh food is viewed as a key sales driver and point of difference, said Morrisons.
The retailer has developed a ‘Fresh Lab’ in its Kirkstall, Leeds, store to test out new ideas; broader produce ranges; new methods of display; specialist meat, fish and cheese products and improved signage.
Morrisons said customer reaction has been positive and it will be looking to roll-out elements of the new offer in 2012.
The supermarket is optimising space in store. It is freeing-up shelf space in the centre aisles to extend its fresh and homeware offers and introducing children’s clothing for the first time.
A trial store, in Shrewsbury, is reported to have been a success; with sales and margin improvements, Morrisons said. A roll-out is planned for the second quarter of 2012.
Morrisons is also expanding and is targeting 2.5m sq ft of new store space in the three years to 2013/14, with 600,000sq ft in the current year.
In the period, Morrisons opened 16 new stores, which had previously been owned by Netto.
Morrisons said it is also planning launch a major range expansion in ready meals in the third quarter of this year.
Effiicency drives include opening service counters later in the day and reducing the amount of shelf-stacking taking place during store opening hours; the roll-out of an EPoS till system to around 9,500 tills; and better procurement, including the design of a new ‘lean build’ store, which will open in the second half.
Morrisons South West regional distribution centre at Bridgwater will open in October and become fully operational in the first quarter of 2012/13. It is on track to deliver its target £20m of savings by 2014/15, said Morrisons.
Morrisons said new growth opportunities span production, convenience and online. It is planning to expand its own production facilities.
In convenience it has opened two of three planned trial stores. Early results have been positive, said Morrisons. The third store will open during the third quarter.
In the online channel, Morrisons is installing kiosks for the Kiddicare business, acquired earlier this year, in 28 stores. These will enable customers to order Kiddicare products online.
The supermarket said it was on track to launch Morrisons.com for non-food next year.
In the online food channel, Morrisons said it had established a team in New York to work alongside the FreshDirect business, acquired in March, to develop an online food business. And it has recruited former Apple marketing boss, Simon Thompson, to lead the team and development of Morrisons.com for food.
Dalton Philips, chief executive, said: “In a tough economy shoppers are looking for unbeatable value on fresh food, great deals on national brands and the best prices at the petrol pump. Our Price Crunch campaign has delivered these for our customers throughout the period.
“In addition to growing sales and delivering good profit growth, we also made great strides in developing the business for the future. We have opened our first convenience store, invested further in our unique production capabilities, increased efficiency across the Group, gained valuable insights from our trial stores and taken our first steps towards becoming a multichannel retailer. I am confident we will make further good progress in the second half.”