Morrisons' like-for-like sales growth has been more than twice that of its rivals and it's quickly gaining market share. So what is it doing right?

The undisputed heavyweight food retail champion of the United Kingdom, by unanimous verdict, is... Morrisons. Bradford may have lost the 2008 City of Culture arm wrestle with Liverpool, but its proudest retail export carried all before it in trading terms. This week I'd like to ask if there really are "more reasons" to shop at Morrisons.

Let's start with the facts. Morrisons' like-for-like sales growth, excluding petrol to give a truly comparable figure, was a country mile ahead of the industry average. Its 9.4% growth was 2% above even the most optimistic of City forecasts and left the likes of Sainsbury's, Tesco and Asda (all milling around the 3% to 4% like-for-like mark) for dead. Market share is being gained hand over fist. Why?

They may have spent a fortune on it, but the advertising is definitely working. The combination of Essex raunch (van Outen), Scottish dourness (Hansen) and retro charm (Lulu) seems to be pressing the right buttons with customers, and footfall growth has been stellar.

That's all very well but if the offer isn't there and the store ambience is wrong, inquisitive new customers only come once.

The stores do look better, although only a minority of sites have been given the "Refresh" makeover (management did not expect like-for-like to pick up much until the whole chain had been revamped).

Availability has been spot on and the fresh food ranges have caught customers' imaginations.

Morrisons, while well regarded in the north for fresh food has up until now found persuading Southerners of its fresh quality an awkward task. This obstacle seems to have now been overcome.

Morrisons was also spot on promotionally. One booze promotion in particular was a spectacular winner (I didn't know people still drank Baileys), but management read the consumer better than the opposition. If the Oriel view is right and we are heading into a consumer recession, then the ability to pitch promotions at the right level is clearly going to stand Morrisons in good stead. The brand is already synonymous with value, after all.

All in all, Morrisons' title-winning numbers are built on firm foundations. Management is on the customers' wavelength and, as the Refresh programme continues, so will the strong sales growth. There are few pot holes in the yellow brick road just now.n

Jonathan Pritchard,

partner, Oriel Securities

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