Differentiation, a unique selling point that sets one business apart from another, is often talked about in retail but less frequently achieved.
When executed successfully, however, it can make a crucial difference in performance.
Doing ‘what Amazon can’t’ has been an objective of retailers on many occasions and has served them in good stead. And when Mark Price ran Waitrose he famously made it a mission to “be everything the discounters aren’t”.
In the hardscrabble world of grocery, where many competitors stock the same brands and margins are thin, differentiation that actually adds profits rather than froth can be hard to achieve. But, in its Market Street fresh counters, Morrisons may have a great opportunity.
While other grocers have scaled back their specialist counters, such as fishmongers or butchers, at Morrisons, they remain core to the proposition. They could now play a part in the grocer’s recovery following tough trading and the loss of its big four status to Aldi.
“While other grocers have scaled back their specialist counters, such as fishmongers or butchers, at Morrisons they remain core to the proposition”
Tesco is the latest grocer to swing the axe on counters and hot delis. Last week, concluding a process begun all the way back in 2019, it revealed it would shut the last remaining counters, following similar moves by Asda and Sainsbury’s.
Tesco reasoned: “We have seen a significant decrease in demand for our counters over the last few years, and our customers no longer say they are a significant reason for them to come in store and shop with us. Instead, they are choosing to buy from our wide range of great quality products available in our aisles.”
You could ask though, as Shore Capital analyst Clive Black has, whether “this has been a bit of a self-fulfilling process with lesser and lesser commitment doing little to support the counter proposition”.
The sales value of Morrisons’ Market Street counters is not broken down, but the grocer has traditionally made much of their importance, reinforcing its credentials in product provenance and quality.
Some would argue Morrisons’ continued counter presence only shows it is out of step with a changing world, but its uniqueness could mean that a counter-attack would help restore Morrisons’ fortunes. The counters bring some experiential appeal as well as showing off its food skills and prowess.
At the moment grocery is dancing to a one-note tune – price. However, the cost-of-living crisis and obsession with value over all else will not last forever.
Morrisons of course cannot lose the plot on price. Value for money was traditionally one of its strengths along with quality. There’s no doubt that it fell out of step on that front. However, it is amping up the volume on value – last month, for instance, it cut the prices of around 1,000 products by an average of 20%.
It is also investing in its loyalty programme, MyMorrisons. This is sensible, considering how effective Tesco’s changes to ClubCard have been in providing members with value for money and exclusive deals.
“Retail sales are fought over on a daily basis – from when the shutters come up to when they fall at night. Value is a ticket to entry”
Retail sales are fought over on a daily basis – from when the shutters come up to when they fall at night. Value is a ticket to entry. But then, what reason do shoppers have to choose one store over another?
For Morrisons, counters could be one compelling foundation of appeal. The benefits of a more experiential food offer, alongside value, can be seen at Marks & Spencer’s refreshed food halls.
At Primark, experience has been put side by side with value in flagship branches. This shows that it matters as much to price-sensitive shoppers as to the better-heeled. Stores in general have rebounded in the aftermath of the pandemic. It stands to reason that good stores should appeal most and Morrisons can play into that through its counters.
Morrisons had a poor year in 2022. However, chief executive David Potts signalled that while headwinds are still blasting, he was confident of “improved trading momentum” after a “sequential improvement” in like-for-likes over the last two quarters.
Perhaps a Morrisons ‘counter-attack’ in the coming months could further help restore its fortunes as differences among some rivals erode.
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