Morrisons gets stores ready for a fresh future

When Morrisons closed its store in Royal Tunbridge Wells six years ago, it admitted that its offer had failed to win over shoppers in the posh Kent town. The closure came at a time when the retailer was struggling with the integration of Safeway and had just announced its first profit warning in 36 years. So when it opened the doors on a new Tunbridge store six weeks ago, it wasn’t just another bog standard store opening. It was a sign of the confidence Morrisons has in its new fresh offer and ‘store of the future’ format.

These stores coupled with the retailer’s new convenience stores are expected to play a key part in Morrisons’ drive to expand south and reach a further two million households over the next three years. So what has the retailer learnt from its original aborted foray into Royal Tunbridge Wells - and will the new store be more successful?

The highlight of the 26,000 sq ft ‘store of the future’ is without doubt its fresh produce offer. Having been criticised in the wake of the Safeway deal for the paucity of its range, Morrisons has joined the extra mile with its new fresh concept. The store stocks more than 500 fresh produce lines, many of which are laid out on beds of ice and regularly sprayed with water vapour. The range includes samphire, okra, smoked garlic, purple potatoes, five varieties of chilli and myriad other exotic fruit and veg - its a foodie paradise the likes of which you might expect to find in a Whole Foods Market.

Morrisons started trialling its fresh concept nearly two years ago and now has 43 of the new fixtures up and running. Keeping the section well stocked and maintaining the displays is not easy, admits group retail director Mark Harrison. “Staffing costs us about 200bps more than rivals already because of the number of staff we have in store,” he explains. “It’s really a case of just retraining the staff that are already there. All staff go through an intensive eight-week programme and then they are ready to run with it.”

Fresh produce is not the only theatre in the store, however. The first thing customers encounter on entering is the flower shop, which Morrisons claims is more akin to what you would see in a high street florist than the usual supermarket offering. Indeed, trained florists can make up and wrap bouquets on request while the store also has a pre-order and collection service for special occasions - with arrangements costing up to £80.

Elsewhere, walls have been removed so shoppers can see the store’s bakers, butchers and fishmongers at work and at all times shoppers are offered the chance to try before they buy, whether its cheese, continental meats or the latest sourdough loaf.

Morrisons has clearly responded to criticisms of its range and so-called ‘posh’ southern shoppers can certainly find plenty of products to lure them away from the likes of Waitrose and Sainsbury’s. But, insists CEO Dalton Philips, Morrisons is not forgetting is core, price-focused customers.”Look around the store and it shouts value”, he declares.

He’s not wrong - for all the fancy produce on display the overriding message being conveyed throughout the store is price. Outside, there is a banner promoting M Savers, the budget own-label range that replaced Morrisons Value in January. Inside, more overhead signage highlights the M Savers products available for less than 50p. This gives way to banners proclaiming “thousands of bargains in-store every week”, while every gondola end is packed with promotions and meal deals.

Even the floor has been utilised to convey the value message. In the wine aisle, which has been widened and laid out by price, messages on the floor point to the sections of wines for under £5 or under £8. These sit next to a small section of premium wines being sold for more than £20, which have proven so popular the store intends to double the space devoted to them.

Morrisons has earmarked capex of £1.7m per store for future developments and to break even the retailer needs sales uplifts of circa 4% to 6%. These are ambitious targets - especially in the current economic climate - but the early signs are positive, with produce sales up 15% and deli sales up 40% to date. No wonder the retailer is confident it has hit upon the right formula not just for Royal Tunbridge Wells and the south of England, but the whole of the UK.