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Wm. Morrison Supermarkets PLC is holding its own in the battle for the British supermarket customer, despite its relatively small size and regional focus. England's fifth largest supermarket group, behind the national giants Sainsbury, Tesco, Safeway, and Wal-Mart-owned Asda, Morrison remains somewhat concentrated on its traditional northern England region, despite moves during the late 1990s to open stores in the country's southern regions. Morrison operates 107 stores, some 80 of which include gasoline stations. More than 30 Morrison supermarkets also feature branch banking in a partnership arrangement with Midland Bank. Morrison stores stock some 20,000 items; Morrison's private labels account for more than half of all sales. The stores feature a 'Market Street' concept, with specialty shops, including fishmongers, butchers, pizza, and baked goods, and American shops--selling doughnuts and hotdogs&mdash′oviding a High Street shopping experience to Morrison's largely suburban customers. Morrison boasts to be the sole grocer in the United Kingdom that offers the same prices in all of its stores. The company also produces most of its own products, through its Farmers Boy and Wm. Morrison Produce subsidiaries, enabling it to keep its prices--and costs--low. Morrison is led by 70-year-old Chairman Ken Morrison, son of the founder. The Morrison family owns 40 percent of the company, worth about £900 million. With no clear successor in sight, the company has not ruled out a future takeover by one of its larger rivals.
Wholesale Origins at the Turn of the 20th Century
William Morrison began his career selling eggs and butter wholesale, founding William Morrisons (Provisions) Ltd. in 1899. Soon after, Morrison opened a stall in Bradford, England's market, and then added stalls in other nearby markets. By the 1920s, Morrison's business had flourished enough to allow him to open his own retail stores, offering counter service, in the early 1920s. Morrison's operation remained a small, Bradford-area focused business throughout Morrison's lifetime--the company's warehouse was in the garage behind the family's home. Morrison had six children, the youngest of whom, Ken, the only boy, was born when Morrison was already 57 years old.
The younger Morrison was already working for his father by the age of five, running deliveries and later stocking goods in the warehouse. While his father encouraged Ken Morrison to study for a different future, Morrison joined the army at the age of 18. In 1950, with his health failing, William Morrison offered the family business to his son. Morrison joined the company that same year, telling the Independent: 'I decided to make a go of it.'
Ken Morrison approached the grocer's trade with a new perspective. Rather than the small, urban center shops run by his father, Morrison saw the future in larger-scale supermarkets, particularly in ex-urban and suburban locations. At the same time, improvements in packaging, and increasing branding of grocery products were occurring, coupled with a growing trend toward self-service shopping. Taking over as company chairman in 1956, Ken Morrison steered the family company into the newly developing supermarket industry, placing prices on all of its goods and adding checkout lines, a first for the Bradford area.
Morrison next turned his attention to opening new stores. In 1962, he bought an abandoned theater in Bradford and converted it into a supermarket. Once transformed, the theater offered some 5,000 square feet of retail space and a parking lot for the company's increasingly mobile customers. The success of that store encouraged Morrison to begin opening new stores. In 1967, the company backed its expansion with a public offering on the London Stock Exchange. Morrison's focus remained on its northern England region, and by the late 1970s, the company had succeeded in establishing itself as the region's top supermarket and one of the top chains in the country.
At the end of the 1970s, Morrisons, while continuing to open new stores, began to make acquisitions of other stores. These included the ten-store chain of Whelans Discount supermarkets, purchased from JJB Sports head David Whelan in 1979. In 1981, the company made a new expansion with the acquisition of the Mainstop grocery store group. The company's roots in wholesale selling proved central to generating profits while maintaining low prices, as Morrison operated its own subsidiaries to provide products, packaging, and distribution to its stores. Meanwhile, the company's format--a Market Street concept that reproduced the feel of the stalls and small shops of a typical High Street around the periphery of the Morrison store&mdash⟩pealed to customers.
Going National for the 21st Century
The company's growth during the 1980s brought it to more than 50 stores by the beginning of the 1990s. Meanwhile, the failing British economy of the late 1980s and early 1990s was bringing pressure on the company. Its competitors were leading a consolidation of the industry, through a wave of takeovers and acquisitions that created four giant supermarket chains--Asda, Safeway, Tesco, and Sainsbury. Morrison's competitors also began wooing customers with a series of promotions, loyalty cards, and other services, such as extended store hours, as well as launching aggressive ad campaigns. Morrison resisted temptation to join its rivals in this expensive competition.
Instead, the company clung to its discount formula and its insistence that all of its stores exhibit the same prices. Where its competitors' prices varied from store to store depending on their locations, Morrison's single-price formula contributed in winning customer loyalty. Nonetheless, Morrison bowed to some of its competitors' pressure when in 1993 it agreed to extend its store opening hours to include Sundays. The result of this move, however, was an increase in annual sales and profits.
Despite these moves, the company still faced a withering competitive climate and a continued economic crisis. By 1995, for the first time in 20 years, the company posted no new-store openings. Yet Morrison did not rest for long. With 81 stores by mid-decade, Morrison needed to continue building scale in order to compete with its giant competitors. The company returned to new store openings, including a growing number of superstores, modeled after the French hypermarket concept that extended traditional grocery lines into a wide variety of consumer goods. Morrison opened four superstores in 1996, while converting several other stores, during a £100 million expansion program.
The company's expansion also took it into new territory--for the first time, the company began opening stores outside of its traditional northern stronghold, moving into the highly competitive southern regions of England. While these moves raised eyebrows, the company's new stores--which shared Morrison's commitment to its single-price policy--quickly proved to be among the company's top revenue generators.
In 1997, Morrison reached an agreement with Midland Bank to bring banking into its supermarkets, matching its competitors. Yet, as the larger supermarket groups lavished spending on services such as home delivery and Internet shopping, Morrison remained steadfast on its no-frills, low-price formula to help it compete. At the same time, Morrison stepped up the pace of its store portfolio expansion, opening or buying ten more stores in 1998. Aiding the company's profits was the opening of a second distribution facility in Cheshire in 1998, which helped the company control its transportation costs.
The company faced an entirely new level of competition when global retailing giant Wal-Mart announced its acquisition of the Asda supermarket group. That chain's traditionally strong presence in the northern regions of England caused many analysts to fear for Morrison's future. Indeed, by then Morrison was one of the few remaining regional players in a market now entirely dominated by national supermarket groups, while the entry of Wal-Mart in the United Kingdom promised to force new globalization moves among that country's largest supermarket groups.
Yet Morrison, which continued its own steady national expansion, continued to buck the trend, even showing steady profit and sales growth in the late 1990s. The company's control of its supply and distribution left it less vulnerable to the price wars raging elsewhere in the sector. Stepping up this end of its business, Morrison completed a new investment program in its Farmers Boy subsidiary with an opening of a new 180,000-square-foot processing facility. At the same time, the company continued to acquire stores, including three superstores from Cooperative Retail Services, based in London. Celebrating its 100th anniversary in 1999, the company opened its 100th Morrison supermarket. By mid-2000, the company had completed a new round of store openings and acquisitions, bringing its total store holdings to close to 110 stores.
Ken Morrison, nearing 70 years old, remained at the helm of the company as chairman. Yet the succession of the company began to be called into question. Despite having turned over the managing director's position to John Dowd in 1997, Morrison's hands-on approach to his father's company remained an important factor in the firm's ability to compete in the crushing British supermarket climate. Morrison continued to insist at the turn of the company's second century that he would remain with the company, as he told the Daily Telegraph, 'as long as I am enjoying it.'
Principal Subsidiaries: Farmers Boy Ltd.; Farock Insurance Company Ltd.; Holsa Ltd.; Neerock Ltd.; Wm. Morrison Produce Ltd.
Principal Competitors: ASDA Group Limited; Boots Company Plc; Budgens Plc; Greggs Plc; Iceland Group Plc; J Sainsbury Plc; John Lewis Partnership Plc; Marks & Spencer Plc; Safeway plc; Somerfield Plc; Tesco Plc.