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.

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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?".




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