As Morrisons announces an extra £300m cuts, even Market Street isn’t entirely safe

Morrisons boss Rami Baitiéh has often conjured up the ghost of Sir Ken Morrison to explain his ethos since he took the helm of the supermarket in 2023.

And never more so than when defending the pride of the supermarket, its Market Street fresh food offering – which, as rivals have shed their counters en masse – he has repeatedly promised to maintain.

So it came as a shock, even considering Baitiéh’s recent warning of more cuts to come, when Morrisons announced on Monday it was shutting 72 fresh meat and fish counters, along with 52 cafés, 17 convenience stores and 13 florists.

On Wednesday, unveiling its results, Baitiéh went further, vowing Morrisons had set a further £300m target in savings, on top of the near £700m his turnaround has already slashed.

But is it a move too far, a betrayal of the spirit the former Carrefour boss has promised to keep alive?

Morrisons points out that in the overall context of recent supermarket cutbacks, its measures this week are a drop in the ocean. The closures put 365 jobs at risk, whereas Sainsbury’s kicked off the year shutting all its in-store cafés and making 3,000 people redundant.

Morrisons also argues its decision to close all 18 branches of its Market Kitchen grocery/takeaway fusion concept – first introduced in its Canning Town store in 2019 – is simply ending a trial that had run out of steam.

But Market Street is a symbol of what makes Morrisons different. Only last week, The Grocer revealed Morrisons’ newly arrived group trading director Andrew Staniland was planning to launch an overhaul of the Market Street offer, under the strapline ‘Morrisons Magic’. It may be a harder sell now, while Asda boss Allan Leighton can boast it is investing as Morrisons retreats.

“Morrisons is implementing practical strategy enhancements ahead of expected turbulence in the UK food & grocery market from rising food inflation, increased National Insurance contributions and minimum wage hikes,” says Eleanor Simpson-Gould, senior retail analyst at GlobalData. “However, this may negatively impact the loyalty of local customers, who may favour these services,” she adds.

“Morrisons must be cautious, particularly when closing Daily convenience stores. As competitors ramp up investment in small store formats, Morrisons must keep momentum on enhancing its convenience footprint through rapid delivery services and improvements in store standards.”

Freeing up funds

Yet there is also common sense behind this week’s decisions. Baitiéh is clearly determined not to allow a promise to a predecessor to force him to fight with one arm behind his back when it comes to freeing up money to put into prices and its loyalty scheme.

The closures were a necessary move at stores where footfall was so low they had become “simply uneconomic”, he said.

Addressing analysts after delivering its Q1 results, including like-for-like sales up 2.4% to £4bn, Baitiéh leant again on “the values of Sir Ken Morrison”, pointing out he “was also a pragmatic moderniser”.

“And we must be too. Of course we do not take lightly the disruption and uncertainty they will cause to our colleagues.

“But removing these areas that are not contributing will enable us to focus our investment and our energy on the key growth areas. Every husky needs to pull the sled.”

Baitiéh also stressed it would be foolish for Morrisons to treat its customers as one when it comes to Market Street, something that no doubt Staniland will be mindful of.

Whereas at some stores fresh counters are thriving and are the heartbeat of those supermarkets, it is true many are sad-looking and ignored.

“In this crucial second year we will use our new strength and momentum to continue to shape Morrisons as a modern, vibrant, broad-based, food-obsessed business, and to actively manage the complexities of retailing in different areas and different demographics,” Baitiéh added.

The challenge is to give customers more reasons to shop at Morrisons and deliver on the promised ‘magic’ in its wider food offer, pricing and More Card, by cutting stuff out judiciously and carefully.