Optimisation Plan progress
Our aim is to become the ‘Food Specialist for Everyone’, and that means:
Food specialist |
We really understand food:
|
For everyone |
Great food which is also:
|
Our Optimisation Plan, originally communicated in 2007, set out a number of programmes designed to deliver by our financial year ending January 2010, and we remain well on track. Key elements of the Plan included:
- refreshed and rebranded stores;
- range extension and product innovation;
- investment in further manufacturing capacity;
- an increase in distribution capacity in the South;
- in-store efficiency initiatives;
- replacement of our systems; and
- Corporate Social Responsibility initiatives.
Progress in each of these areas is outlined below.
Refreshed and rebranded stores
Customers visiting Morrisons today experience a modern and unique food specialist, following the successful completion of the programme to freshen-up our stores and brand. The programme covered the exterior and interior signage of the stores, our Market Street counters, our trucks and our filling stations. All work was completed, on time, at an average cost per store of £0.5m – a very cost effective new design scheme when compared to similar programmes elsewhere. Alongside the physical work, all staff were fitted with uniforms carrying the new brand and over 3,000 own-brand Morrison products received new packaging.
Range extension and product innovation
Our product ranges, too, have been extensively reinvigorated. Range development has been particularly strong in ‘Value’ lines but value and freshness are not incompatible, as seen in the launch of our innovative ‘Fresh Ideas’ ready-to-cook fresh meals, which offer a great value alternative to dining out.
Our control of the fresh food supply chain, through our bakeries, fruit and vegetable packing facilities, meat and cheese processing plant and abattoirs gives us great flexibility to respond to changing customer needs and priorities. The value conscious behaviour that came to the fore in 2008 provided us with the opportunity to use this flexibility to great effect. We led the industry with great value deals on fresh foods, such as our £4 family meal deals which comprised eight fresh food items for 50 pence each. Such deals, when advertised, create great demand, and it was only our close control of the supply chain that allowed us to cope with the volumes generated without disappointing customers looking for a bargain. Similarly, our abattoir and butchery operations are designed to use the whole animal, with minimal food waste. We have long sold lower priced cuts of meat such as brisket and neck fillet, which make delicious meals at bargain prices. These cuts are once again popular, and Morrisons is best placed to provide such variety and value. Equally, by being close to the source of supply, by being in the livestock markets every day and by only offering fresh fish on our counters, our fresh meat and fish quality cannot be matched even by much more expensive competitors.
Our advertising campaigns built on the previous year’s success, with a continuation of the ‘Fresh Choice for You’ message placing emphasis on freshness, in-store production, in-season food and our food provenance knowledge. We continued to use down-to-earth, approachable personalities including Helen Baxendale and Richard Hammond – the campaign produced the highest consumer recall in 20081. Our research has confirmed that the campaign has significantly increased consumer awareness of Morrisons and what we stand for. To balance the ‘Fresh’ message, we launched a high impact ‘Price Crunch’ campaign in April, which ran through the rest of the year and was used to highlight our great value offers and everyday prices. This too, struck a chord with our customers.
1 (source: Marketing Magazine – Adwatch)
Distribution network investment
We continued to invest in our infrastructure as part of our Optimisation Plan. The new distribution centre at Sittingbourne, in Kent, is well under way. It will manage the growing volumes of our business in London and the South East and will open by the end of 2009. We took the opportunity to acquire the freehold of the site during the year, at a cost of £80m, in order to ensure maximum flexibility for the future. We were pleased to open our new abattoir at Spalding during the summer of 2008, and it is already producing at high volumes and very good levels of efficiency. This extra capacity has been key to ensuring that we can offer fresh pork, beef and lamb that is all UK sourced and all processed by us – something unique in British supermarket retailing.
In-store efficiency initiatives
We continue to invest in ways to improve customer service whilst also becoming more efficient in our stores. Following a successful trial, self-scan checkouts are now rolling-out to over half our stores. Queue management software, which predicts very accurately the number of tills required to be open to serve the customers in store, is also at an advanced stage of roll-out.
Replacement of our systems
The Group’s major programme of systems renewal continued to make good progress during the year, with detailed planning completed and Wipro, one of the world’s premier computer services companies, selected as our implementation partner. As previously announced, the implementation programme began in late 2008 with the pilot phase of our new human resources and payroll system, which will go fully live during 2009. The coming year will see the implementation of financial systems, depot systems and the start of the roll-out of the new point of sale systems into stores. In 2010 we will begin to replace systems in our manufacturing facilities, throughout the supply chain and the product masterfile.
Corporate Social Responsibility initiatives
Much of our investment, whilst improving the business, has also improved our carbon emissions. In the past two years we have invested £66m in new, efficient refrigeration capacity in our stores and £18m in new trucks and trailers. These measures have improved our chill chain, and also significantly reduced our emissions. A similar programme to replace all our petrol pumps with new, low emission technology, is well advanced, with 220 out of 287 filling stations having been re-pumped at the year end. As a result of these and other initiatives, our target to reduce our carbon footprint by 36% from 2005 levels has been achieved one year early. We are delighted to be the only grocery retailer to have been awarded the new Carbon Trust Standard for carbon reduction.
