Well there you have it. While some analysts were predicting retail Armageddon when Morrisons revealed its half-year performance this morning, the Bradford-based based retailer was actually able to delight investors by not being quite as bad as everyone was predicting.

Of course the results were not great - like-for-like sales down 0.9% and pre-tax profits falling 2%, are not what anyone wants, and there was an element of CEO Dalton Philips talking about a two-year performance that he was very comfortable with that was reminiscent of Liverpool football fans chanting wistfully about their club’s fifth European Cup success in Istanbul in 2005.

But you have to have some sympathy for Philips’ contention that the performance was actually OK given just how tough the economic environment is out there. More and more people are running out of money before the months end, parents are skipping meals so they have enough to feed their children and food prices continue to rise.

Morrisons is currently undergoing one of the most dramatic and interesting periods of change in its history, with plans for online retailing, its new fresh format stores and own label overhaul, Morrisons is planning for long-term future.

And key to this future is the convenience sector. When it launched its first M Local last year, the reports on the store were glowing. Rivals surely had a few sleepless nights, but probably told themselves not to worry as the fulfilment model of feeding the little store from a nearby bigger brother was not going to be scalable.

They were right of course - but today Morrisons showed that it has found a way round this problem with a new dedicated distribution centre capable of sustaining 100 c-stores in London. Now’s the time for rivals to sit up and take notice, if they haven’t already. Morrisons is desperately underrepresented in the capital, but that could be about to change.

Time will tell if the long-term view will pay off for Morrisons - but it’s certainly a bold strategy that deserves plenty of credit, rather than all these tidings of doom.

 

Topics