The squeezed supermarket middle

It's been a tough week for the big supermarkets following the sacking of Morrisons' CEO Dalton Philips.

It's been a turbulent week for retailers. Following Tesco's decision to shut 43 shops and cut 1,000 jobs, J Sainsbury plans to trim 500 staff at store support centres. And Wm Morrison has sacked its CEO, Dalton Philips, after five years in the job. The group's profits halved over the past year as sales slid.

Christmas sales were down 3% on last year, an improvement on 2013 but still inferior to rivals' figures. Chairman Andrew Higginson said it was time for a "fresh pair of eyes". His successor "won't be anyone with L-plates in food retail".

What the commentators said

It takes at least six months for customers who don't shop at a store regularly to perceive a price change.

And it hardly helps that the group's new loyalty card, Match & More supposed to match prices at discounters Aldi and Lidl as well as Morrisons' peers is too complicated. But the bigger problem was that he made "too many mis-steps" before hitting on the right approach.

Philips inherited a supermarket lacking the high-growth segments: convenience stores and an online offering. But his efforts to rectify this were accident-prone, said Andrew Clark in The Times.

He bought an online childrenswear shop to gain digital expertise. It lost a fortune. Then he got Ocado onboard. The upshot is that the group still only makes 15% of sales online.

Morrisons moved upmarket, but "lacked the product range and specialisation to be a hit at the premium end", said The Independent's Chris Blackhurst. It then lost its reputation for low prices as Aldi and Lidl flourished.

Now it is the smallest of the players in the middle of the market grappling with stiff competition at the top and bottom. Will Philips' successor "really be able to do any better?".

Recommended

The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Chipmaker Arm gets a helping hand from Nvidia
Tech stocks

Chipmaker Arm gets a helping hand from Nvidia

Arm, the British chip designer, is to be sold to a US peer in a record deal for the industry. The consequences will be far-reaching.
21 Sep 2020
How options traders are driving the stockmarkets
Stockmarkets

How options traders are driving the stockmarkets

Ordinary investors in the US are increasingly turning to options. And that's making the markets very volatile.
21 Sep 2020
Why investors should take cycle theories with a massive pinch of salt
Sponsored

Why investors should take cycle theories with a massive pinch of salt

Things move in cycles, and they can be useful for timing trades. But it's easy to become wedded to a particular cycle and make the wrong decisions. Do…
21 Sep 2020

Most Popular

Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
IAG's share price is ready for take-off - here's how to play it
Trading

IAG's share price is ready for take-off - here's how to play it

The owner of British Airways has had a turbulent year, but is now worth a punt. Matthew Partridge explains the best way to play it.
8 Sep 2020