Sector News

What does David Potts face on his first day as CEO of Morrisons?

March 17, 2015
Borderless Leadership
Morrisons’ new chief executive David Potts starts work today with a trip to one of the retailer’s many manufacturing sites and a store visit.
 
It will be the former Tesco executive’s first chance to assess just how grim it is up north at Morrisons’ Bradford headquarters after the company revealed a loss of nearly £800m last week.
 
Potts was once considered a serious contender for the top job at Tesco, as was Morrisons’ chairman Andy Higginson, so they’ll both be keen to test their mettle against Dave Lewis, the former Unilever executive who is now heading up the UK’s biggest supermarket chain.
 
Lewis has already given Tesco shareholders reason to hope, with the beginnings of a sales revival delivered through carefully targeted price cuts, better availability and improved customer service courtesy.
 
It’s a basic recipe that Potts is also likely to follow in the hope of similarly swift results. But getting long-term growth will be harder to achieve, as Morrisons’ northern heartland is particularly vulnerable to the fast-growing discount chains. As shoppers continue to keep a tight rein on their grocery spending, any Tesco recovery will also make life harder for all its rivals.
 
Having started work in a supermarket aged 16, Potts is not short of hands-on experience and he’ll need to channel all of that into improving the experience for Morrisons’ customers. As Higginson pointed out last week, the chain’s colourful “market street” concept – with trained butchers, bakers and fishmongers – is one way Morrisons can set itself apart from Aldi and Lidl and its bigger supermarket rivals. Ensuring these counters really do add value is likely to be near the top of Potts’ to-do list.
 
Where he’ll be less comfortable is assessing how to realise the potential in Morrisons’ unusual vertically integrated manufacturing set-up. In the past, Morrisons used its abattoirs and vegetable packing plants to drive ruthless efficiency so it could offer shoppers cheaper, fresher produce. Higginson said last week that Morrisons could use manufacturing “as a weapon” in its fightback. But doing that will mean improving the quality of the own-label goods these plants produce. Finding cash to invest in that may be just as hard as keeping up with Tesco and Asda’s price cuts.
 
By Sarah Butler
 

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