Retail Day
Retail Week, today
Posts Tagged ‘Morrisons’
Kicking off
Exceptionally quiet weekend for retail news in the papers - in fact I don’t think I saw a single story in the business sections - and not much going on to start the week, except Mike Ashley up to his old tricks, trying to derail the Blacks restructuring plan, as the saga of who owns the Kaupthing stakes in Blacks and JD rumbles on. I don’t understand why he can’t just concentrate on running his own business.
We’re flat out here with the plans for next week’s Retail Week Conference and Awards, which promise to be better than ever this year with a host of big name speakers for the conference and a few surprises lined up for the awards. It meant sadly I had to forego the launch of Morrisons’ sponsorship of England’s World Cup bid at lunch time, and Jen went up to Wembley instead, although she did bring me back a cake which bears the flag of St George on it as a souvenir of the occasion.
Morrisons had roped in Teddy Sheringham and Alan Shearer for the launch, but Jen isn’t very impressed by footballers and instead chose to hang out with Morrisons retail director Mark Gunter and his wife, who apparently invited her to tea in Harrogate. Mark has been at Morrisons for years and along with commercial director Martyn Jones is one of the survivors, providing an invaluable a link between its brave new world and the heritage of the business which has been so vital to its recent success.
Morrisons traditionally shied away from such high-profile sponsorships but as it showed before Christmas with its tie-up with Disney’s A Christmas Carol, it is now going all out to really build the brand nationwide under marketing director Angus McIver, who not only bears a likeness to ex-LibDem leader Charles Kennedy, but actually went to school with him too.
Tying up with the England team must pain a proud Scotsman like him - especially as Morrisons inherited the sponsorship of the Scots national football team from Safeway - but the brand-building is working and helping Morrisons punch above its weight in terms of profile. In much of the country it is still a relatively new brand and initiatives like today’s will help cement it in the consciousness of shoppers.
Well, those south of the border anyway.
Out with the old, in with the Newton-Jones
A very enjoyable evening last night at a dinner hosted by Shop Direct Group at Soho House. Shop Direct is of course the company a lot of people still call Littlewoods, but the Barclay Brothers-owned business has been moving at breakneck speed to transform itself from the dowdy catalogue and store business of old to a company where, at Christmas, 65% of its orders were being received online.
That transformation is being driven through by energetic Brummie Mark Newton-Jones, and inevitably is not without pain. Last week the company announced 1,500 job cuts in its call centres, a sad but inevitable function of people now ordering less by phone and more online. And it’s important to point out that the results of the changes still need to feed through into profitability.
Nevertheless, the business would be in a much worse state were it not going through these changes and bold moves like buying the Woolworths brand and renaming Littlewoods Direct as Very are the sort of things the company needs to do to ensure it remains relevant to a new generation of customers.
Shop Direct is keen to be seen as a leader in the online sphere, hence the dinner where there were talksfrom Google’s very engaging UK boss Matt Brittin, who I was fortunate enough to be sat next to, and a very unassuming chap called Liam Wood, who runs an online business called Enviro Lights, selling eco-friendly lightbulbs, having successfully launched a business selling hoover bags with his brother which now turns over £1m a year.
His tale was instructive. He worked in Morrisons while his brother ran a small shop selling vacuum cleaner bags in Derby. But the cost of rent and rates, combined with the threat to his footfall posed by the city’s new Westfield centre, meant his brother realised online was a better place to be and where he could develop a much broader reach for his brand, which he has successfully done through his site dustbag.co.uk
Now the brothers are aiming to launch a new site every year, with the lighting site already managing £200k in sales. These very modest entrepreneurs are a great example of the opportunities the web opens up to people who’ve spotted a niche in the market to reach many more customers than one shop ever could.
Moneybags Marc
Details of Marc Bolland’s pay package have prompted unsurprising outrage from shareholder groups, and it is certainly a punchy package. To be fair a large element of it relates to share options that Bolland forfeited when he quit Morrisons, but nevertheless the exceptional first year bonus which could potentially be 400% of salary really catches the eye.
Now Bolland is a big name with a big job ahead of him, but shareholders will ask, with justification, what Bolland will need to achieve in order to make this bonus. Would be interesting to know what Stuart Rose makes of it all - remember he had to forego his bonus last year in order to quell shareholder dissent.
In other news today, the TNS grocery data has just come out and, as we’d suspected, Asda appears to be the retailer which has lost out, with a small loss of share while Tesco has grown its marginally and Morrisons, Sainsburys and Waitrose continue to prosper. In fairness, Asda’s lack of convenience stores will have hurt it when the snow hit in January, but nevertheless the appearance of money-off vouchers in the weekend news papers was a new and surprising development.
I wonder if we might see Asda subtly shifting its promotional stance and adopting the sort of coupon offers it has traditionally eschewed? It has always said that EDLP was enough and it’s a strategy which has had amazing success both for Asda and Walmart more broadly, but Tesco certainly seems to have regained the momentum with its double Clubcard points deal and Asda won’t sit back and allow its bigger rival to claw back market share.
Dalton’s calling
Here’s a funny story. Yesterday afternoon while George was trying to stand up the story about Dalton Philips, Lisa was set the task of trying to find a picture of him. Where we actually found one was on the site of his parish church in Canada, and a good quality pic it was too. Not that there’s anything funny about him being religious, but I guess it shows that he is a pretty low-profile character. He’ll be needing to find a new parish somewhere in Yorkshire now.
Everything I’ve heard suggests he’s a good choice for Morrisons. Having a lengthy stint in Walmart’s failed German operation isn’t the best thing to have on your CV - although it hasn’t done David Wild any harm - but he is talked of very highly by everyone who knows him and for someone of 41 his reservoir of retail experience achieved in a diverse range of markets is extraordinary and will be a real asset.
What must be exciting for him is the huge potential which remains at Morrisons. Marc Bolland did a great job of putting it back on the straight and narrow but only - and quite intentionally - scratched the surface of the growth opportunities. It is still under-represented in the south, has no meaningful non-food offer, no online offer, no convenience stores and no international presence.
That’s not to say Philips should do all, or even any of these things - Bolland’s view was that there was still plenty of growth to go for in the core business, particularly as the Morrisons’ gospel spread south and the failed Safeway acquisiton was put to rest. But it does show what massive potential this rising retail star has at his fingertips.
I have to mention JJB and the appointments it announced this morning. Very sad David Jones’s illness means he can’t continue as chairman. He made some bad judgments but - despite the malicious slurs against him which dogged his tenure - there wouldn’t be a JJB today if it wasn’t for him.
As for the new appointments, the arrival of David Adams at a company is these days generally a sign it’s in dire straits. That’s not to say he’s not a good hire - quite the opposite, his experience with basketcases like Jessops will be hugely valuable for JJB.
But Matthew Pinsent? I yield to no-one in my admiration for what he achieved in his rowing career, but what can he bring to a company which spent all of last year teetering on the precipice? Sure he’s a highly successful sportsman, but since when did JJB sell oars? They’d have been better off putting Rafael Benitez on the board, he’ll be looking for a new job soon and at least knows about football.
Sorry I Havant a clue
Surprise news yesterday that Anthony Thompson, the boss of Asda’s clothing brand George, has quit to run surfwear brand Fat Face. It’s a surprise because Fat Face’s sales are a tenth those of George, but apparently Thompson - whose CV includes senior roles at M&S and Gap - drives a VW camper van and is into the surf lifestyle. Sadly for him Fat Face isn’t based in Newquay but the rather less glamorous surroundings of Havant near Portsmouth, but given it’s private equity owned he’ll have been offered a terrific package.
Fat Face is a great brand but has become hampered by its debt burden, and having been led through two buyouts by Louise Barnes, I gather the sense was that a new impetus was needed at the top. It’s a fine business but needs to be aware of the danger of over-expansion - I was perplexed to see that a branch has opened at Euston station, no doubt for all those surf dudes heading to Birmingham or Liverpool to catch some waves.
We’ve had the judging day for the Oracle Retail Week Awards this morning, one of my favourite days of the Retail Week year. The quality of entries was better than ever, with almost all the major multiples represented on the shortlist, and that meant the debate was particularly healthy, but still very good humoured as always. We had nearly all our regular judges along, like Terry Duddy of Home Retail, Rob Templeman of Debenhams and Richard Pennycook of Morrisons, and it’s the time that retailers of their calibre take to study the entries and argue hard for the ones they rate that makes the awards the undeniable gold standard of UK retailing.
The Awards are on March 4 at the Grosvenor House and tables are nearly sold out - log on to the site to find out more, as always it will be the biggest night of the retail year.
On the subject of our events, I’m hugely excited that Plymouth’s self-styled Del Boy Chris Dawson of The Range is speaking at the Retail Week Conference, which precedes the awards on 3 and 4 March. He is a famously larger than life character and has really prospered through the recession. He alone should be a good reason to come, but with people like John Browett and Charlie Mayfield on the programme, it’s shaping up to be an unmissable event.
Snow: looks nice, but a bit of a pain
I’m sitting at my desk not doing an awful lot of work if I’m completely honest, waiting to see if England can survive the last two overs against South Africa. We seemed to have it in the bag about an hour ago but we’ll do well to hold on now. The England team really do put you through it.
A decent set of numbers from Sainsbury’s are the highlight of today’s trading updates, although it’s hard to tell just how well they’ve done until we hear from Tesco and Morrisons too. Sainsbury’s came in well behind Waitrose but well ahead of M&S, but I think all the foodies will fall into that space.
Justin King was getting a hard time on Radio 5 this morning about retailers not paying staff who can’t make it into work for their shifts. King’s answer was that the staff would be offered other shifts in order to make up the time. To me that seems a perfectly legitimate response where hourly paid staff are concerned, and fair on both the staff who don’t make it in, and those who do, as well as the business itself.
Because retailing through weather like this is expensive enough without paying people who aren’t in work. Retailers have made extraordinary efforts to get into work, to open their stores and to keep the shelves stocked despite what have been extraordinary weather conditions. The industry has done itself proud, but one group of people might not be too happy, and those are the finance directors.
The costs of keeping going and keeping the stores supplied through not just this cold snap but also the one before Christmas will turn out to be huge. Stock is in the wrong place and lorries have been marooned, and the extra resources required will be significant. It’s the last thing you need at a time when managing the cost base remains vital - let’s hope it clears soon.
Anyway, we’ve held on!
2010 predictions
Well, here we are again. First working day of the new year and from what we’re hearing our last front page headline of 2009 - ‘It’ll be alright on the night’ - was just about right and the shoppers did indeed come out. That’s not to say there won’t have been winners and losers, and the Christmas trading update season, which kicks off on Wednesday with Next and M&S, will be fascinating as ever, even if the figures do always need to be treated with a degree of caution.
Anyway, it’s traditional among journalistic types to make a few predictions at this time of year. So here are a few of mine for 2010, completely random and plucked out of the air in the last two minutes:
- One of Marc Bolland’s first significant acts at M&S will be to scrap the 5p carrier bag charge
- The next Morrisons chief executive will be someone we’ve never heard of
- Best Buy won’t have the impact here everyone is expecting
- VAT will go up to 20%
- The OFT and SFO probes will make for a very difficult year for Mike Ashley
- New Look and Pets at Home will both float successfully, but others may struggle
- At least one of Kate Swann, Ben Gordon and Simon Fox will move on to a bigger job
- John Hargreaves will sell Matalan - but for a lot less than £1.5bn
- Philip Green will do something with Bhs having merged it into Arcadia. The minimum is that it will become a house of Arcadia brands, but don’t rule out more drastic action, changes are needed.
- Retail will have another decent year, despite massive challenges including a VAT increase
You can all have a good laugh at me next New Year’s Eve when I’ll come back to these and see how I’ve done. Anyone care to make a few of their own.
Percy’s party
It was Marks & Spencer’s traditional Christmas press party on Monday night, and they held it in a stunning venue called Forbes House in Belgravia. Most of the journos who attended were from the fashion and consumer press, but there was a good contingent from the business side, including lots of Retail Week veterans like James Hall, James Thompson, Zoe Wood and Neil Craven who are now plying their trade on the nationals.
Stuart Rose was on typically pugnacious form, claiming that once Mark Bolland joins he will step back from the limelight totally, before launching into an impassioned defence of why M&S is so great. I’m not sure I believe him about disappearing off the scene, and it would be a shame if he did as he’s a good egg and one of the genuine personalities who makes this industry interesting.
Marketing director Steve Sharp was there too and on good form as always - it will be interesting to see what his future plans are and how long he sticks around when Bolland comes on board. Was nice to catch up with store marketing and design guru Nayna Mcintosh and HR director Tanith Dodge too, both of whom I suspect are going to be big players in the business going forward.
The party was very glamorous and stylishly done, although the arrival of a giant Percy Pig (star of the eponymous sweet range) was a little incongruous, but also much appreciated as he was bearing a huge supply of M&S’s new pick and mix range for us to take home. He was hanging around at the top of the staircase, and I was rather worried he might be in danger of falling down the elegant staircase, as it must be hard to see what you’re doing when you’re in a huge pig costume.
All the talk of course was about Bolland and when he’ll start - there’s no date yet despite his abrupt departure from Morrisons on Friday - and how he’ll change M&S. I expect one or two quite quick changes - if I had to put money on one big statement I think we’ll see the scrapping of the carrier bag charge, which remains unpopular among M&S’s upmarket food customers. Generally though, it will be made to seem like a steady serene transformation, with Bolland being deferential to Sir Stuart’s legacy as he was to Sir Ken’s, while at the same time paddling vigorously below the water to bring about change .
Singh when you’re winning
Wow, what a day yesterday was - we had to tear up a lot of our plans for both Retail Week and Drapers, which both go to press on a Wednesday, and start over again. I love press days like that - the last one in a similar vein was when Woolies went into administration a year ago - it gives me an excuse to shout cliches like “hold the front page”, swear a lot and run around the office excitedly.
Marc Bolland’s appointment as M&S chief exec seems to have gone down very well with the City, with M&S’s share price soaring by about as much as Morrisons fell. The announcement appears to have taken everyone in Bradford by surprise - apparently it wasn’t due until 430 but was forced out earlier after my university contemporary Mark Kleinman of Sky picked it up. He’s on fire at the moment. Apparently on the Morrisons update call just now the chairman Ian Gibson demanded there were no questions about Bolland, unsuccessfully of course. Steve Hawkes of the Sun asked Bolland if he was wearing an M&S suit - priceless.
A lot of other stuff going on yesterday - as luck would have it I interviewed Stuart Rose at the Drapers Summit, where he said the big thing for Bolland is going to be stepping up the pace of change so that initiatives like branded food don’t take five years to implement. He also urged the audience to vote for the “ccccccomprehensive” party. Can’t imagine which one he was referring to. Amusingly while I was interviewing Rose the ever-persistent Kleinman had apparently arrived at M&S head office and was camped out there waiting for Stuart to emerge.
Then swung by the Arcadia Spring/Summer launch. Glamorous as ever with a rather jowly looking Boy George as special guest. Philip Green and Ian Grabiner were on garrulous form as ever, and Philip was off to a charity dinner with Stuart later in the evening. Someone had apparently paid £10k to have dinner with the two of them, and what a night to do it on - would have loved to be a fly on the wall.
Then finally off to the Drapers awards at the Grosvenor, lots of big names there and a lifetime achievement award for New Look founder Tom Singh. He has a reputation for being rather uncommunicative but even smiled on stage and was very warm and engaging. It was a great moment and a hugely deserved accolade, as the generous applause and ovation he received showed.
Marc Bolland is new M&S chief executive - updated 1525
Well Marc Bolland was definitely a name that was growing in currency for the M&S job over the past few weeks, although he was playing the talk down in a big way when I saw him last a couple of weeks ago.
We should have listened to mystic Creevy: see this piece from July
Interestingly the fashion people who the team are calling from the office seem to have never heard of him, and I expect there will be some criticism from the City (especially Tony Shiret no doubt), but the share price was up 7% last time I looked so on the whole the response should be pretty positive.
I think he’s a good choice for the job. He does lack fashion experience but he lacked food experience when he came to Morrisons and did fine. He knows about managing a big, much-loved brand and that’s what being the M&S chief executive is all about. Interestingly though he’s no fan of multichannel either, which is a big thing for M&S, although to be fair that was more driven by not wanting Morrisons to try to run before it could walk.
Will be interesting to see who Morrisons get in, he has been absolutely the driver of Morrisons turnaround and will be a massive act to follow. I see Rich has already put Kate Swann forward - please no!
