Morrisons profits from 'professional' shoppers hunting for bargains
Friday 09 September 2011
Morrisons has revealed seismic shifts are taking place in the shopping habits of cash-strapped UK consumers, as they face up to the biggest squeeze on household budgets since the recession of the early 1980s.
Alongside an 8 per cent rise in half-year pre-tax profits, the grocer also revealed it had poached Simon Thompson, the global strategy and customer experience director at the technology giant Apple, to spearhead the launch of its Morrisons.com food website.
With consumer confidence near an all-time low, Morrisons waxed lyrical about a growing army of "professional shoppers", who are hunting down price promotions, switching to own-label products and avoiding restaurants to cook at home.
Dalton Philips, the chief executive of Morrisons, the UK's fourth biggest grocer, said: "There is a growing professionalism in people's approach to shopping. We are seeing it across the country, this phenomenon of checking all the prices and, in many cases, leaving the credit card at home, buying in bulk packs – splitting them with friends or freezing." He added that a third of the grocer's customers have no money "left over" at the end of the month.
Consumers' confidence has been battered by high inflation, anaemic wage growth, stagnating house prices and the fear of large-scale public sector job losses. Mr Philips said: "The last three years have seen the biggest drop in spending power since between 1980 and 1983."
The squeeze on disposable income, and other factors, such as rising commodity prices pushing up the cost of everyday items, means the UK has witnessed the highest rise in spending on groceries and food – as a proportion of GDP– since the Second World War, he added.
The group's insight came as Morrisons delivered a 8 per cent jump in pre-tax profits to £442m for the six months to 31 July. Record customer numbers of 11.5 million a week helped the grocer grow its total sales by 7.4 per cent to £8.7bn. Excluding the contribution from higher petrol prices at its forecourts, Morrisons' revenues rose by 4.1 per cent.
The grocer's closely watched like-for-like sales, excluding fuel and VAT, grew by 2.2 per cent. Based on this figure and recent industry data, Morrisons continues to grow its underlying sales ahead of Tesco, Sainsbury's and Asda. On its move into new areas, the grocer plans to start selling food online in 2013 and said it has hired Mr Thompson from Apple, as managing director for Morrisons.com for food.
But Mr Philips declined to divulge details about its online food plans, although they are likely to focus initially on London – where it has a mere 6 per cent market share. What he did say is that Morrisons will introduce a non-food offer online next year, based on the technology used for Kiddicare, the internet retailer of baby products, it acquired for £70m in February.
Meanwhile, Morrisons declined to comment on whether it will make a bid of up to £1.5bn for Iceland, the up-for-sale 796-store frozen food retailer.
As Voltaire once said, “Ice cream is exquisite. What a pity it isn’t illegal”
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