Morrisons: a customer-led purposeful turnaround to success as foodmakers and shopkeepers

The Challenge

In 2014 Morrisons was in crisis. Operating profits were down 52% to £345m. These were its worst results in eight years and after a £1.3bn write-down in the value of its supermarkets, it became an overall loss of some £792m.

It led to decisive changes at the top. A new Chairman was appointed, Andrew Higginson, who as he started to take action to change the leadership and direction said

“this is painful, but it is the start of a new growth period we hope”

He brought in a new chief executive, David Potts, who started on 16 March 2015.

That summer David asked us to help, first to develop a new overall proposition for Morrisons that would be a rallying cry for everyone involved, an idea that customers would find attractive and distinctive, and one that would be true to the business, respected as authentic by sceptical colleagues.

Nine months on, in 2016, the turnaround had begun and he asked us to help work out why Morrisons matters. What is Morrisons’ purpose, in a down-to-earth Bradford grocer kind of way? As he said, if there’s no reason for us to be here then we should probably be part of Tesco – we’d be more efficient that way.

Then in early 2017 we were asked to help with one more aspect of the challenge that went beyond the operational essentials – how could Morrisons become known for outstanding service? This meant defining outstanding service from a customer perspective and, crucially, working out how to realise it through colleagues and the ways they worked and were led.

The Insight

First, the proposition. From conversations with colleagues, Morrisons’ vertically integrated food manufacturing was clearly distinctive, but customers were unimpressed. Food made in a Morrisons factory would be like food made in anyone else’s. However we had learned about another capability to make food in Morrisons… and it was in the stores. Going against all prevailing ‘good practice’ wisdom, Morrisons still had fully trained butchers and fishmongers in every supermarket. They also had bakers, baking bread from flour, in store, several times every day. THIS was interesting to customers, especially when linked to benefits around fresh food and value and to ways of bringing it to life so people noticed and understood.

Then the purpose. It became clear that there were two aspects that mattered in getting to a purpose that people cared about, something genuinely worth getting out of bed for with a bit of enthusiasm. It needed energy around an idea that people naturally cared about, and honesty about the real reason why this all matters and why Morrisons would be missed if it wasn’t here.

Everyone connected to Morrisons has a lot of energy around food, but making and selling food is more about what the business does and how it does it, not why.

The real reason why Morrisons did such unusual things was for customers – gradually Morrisons’ people’s pride in helping ordinary people enjoy eating well emerged.

But the final insight that made the idea sing came from the past and Ken Morrison. He had led the business for years in a very particular way, and what he naturally cared about was still what mattered in Morrisons – good, reliable food quality, AND getting it to customers at prices that made it accessible to all. But Ken’s way was quite particular – very intense and ‘Yorkshireman’, not wasting anything! THAT was why they had become vertically integrated – to protect quality and at the same time to be able to take out waste by controlling more of the end-to-end process, so you get better for less.

Then the service. The easier areas of insight were about what outstanding service means to customers. It starts with nailed-on bulletproof essentials like finding what you want and avoiding queues. But the difference comes from people – generous interaction with shopkeepers who care and with foodmakers who love food.

The trickier part was unlocking this from colleagues who were used to years of being managed in ways that were rigid and focused on task. They needed permission and encouragement to be themselves meaning changes to the way stores are managed and led. The confidence to recognise this and make it part of the answer came from our immersion approach – a number of parallel stories including Timpson and the almost complete freedom they give to their colleagues working in stores, Virgin Atlantic and the personality they encourage in their people and their tone of voice, Barclays Eagle Labs and their generous spirit at the heart of their communities, and The Royal Marines who showed how to select and lead for energy and team spirit, valuing cheerfulness in adversity and encouraging storytelling to bring it all to life.

The Solution

First, the proposition. Customers knew the business for Market Street, a wide display of fresh produce flanked by food counters. The breakthrough came in the language used to describe what they could see and the stories about making food they didn’t yet widely recognise. It leapt out from a customer group when a line buried deep in a concept just seemed to resonate – we are food-makers and shopkeepers. This was then linked to a benefit – fresh food at great value – and then the final jigsaw piece was finding a way to communicate it. Writing it down was not persuasive, but showing it actually happening, in stores would be completely convincing and in the right spirit – it just needed the stores to be undressed a bit. This food-makers and shopkeepers idea took off – loved by colleagues, it worked very well in bringing them together and creating pride in something that had always been true, just never celebrated. The advertising was pitched and the strap-line ‘Morrisons Makes It’ was born.

Then the purpose. From the start we said the idea is what matters not the sentence, and also that the scarce quality around any organisation’s purpose is belief that it is true, that it really IS why the organisation is there, not just a fig-leaf in front of maximising money. An idea was gradually brought together that was strong enough to grow the energy of everyone involved, and authentic so it would be believed.

It was in three parts:

• Pride in the food that Morrisons provides. Good food is the most obvious thing that everyone in the business, even working in non-food areas, cares about.

• Reducing waste of all kinds. Systematically finding better ways to do things, taking out what doesn’t matter (eg store signs saying In and Out not Entrance and Exit – fewer letters!), building in flexibility (eg making bread in stores to respond to demand, and selling it as bread or using it to make sandwiches)

• So more people can afford to eat well. The real outcome that matters, a job that the whole nation cares about.

As the solution evolved, contrary to our expectations the leadership team wanted to use a long sentence and to be patient with the time it would take for the business to learn it. So the purpose became ‘To make and provide food we’re all proud of, where everyone’s effort is worthwhile, so more and more people can afford to enjoy eating well’.

Then the service. Morrisons set out to create a virtuous circle:

• a vibrant, happy food-focused place to come to for customers in their communities.

• and a fulfilling, friendly place to work for food-loving, outgoing and cheerful colleagues who like this kind of environment.

It was recognised that this would need investment. The business case for something like this needs real outside-in belief behind it – belief that the investment will make changes that colleagues appreciate, belief that they can break free from the assumptions and habits that had grown over many years to put tasks ahead of customers and to do the right thing with more freedom. And then belief that if they do these kinds of things that customers will notice and appreciate them, and then go on and decide to use Morrisons more, finally bringing a return on the investment.

The Result

Overall, by the latter part of 2018 Morrisons was on a run of 11 consecutive quarters of like-for-like growth, reversing four years of consecutive quarterly declines.

Andrew Higginson, Chairman, said: “With each passing quarter, the Morrisons team is building a better and better business. New customers who try Morrisons and tell us they really enjoy shopping with us: our friendly colleagues, the quality of our fresh food and our low prices.”

David Potts, Chief Executive, said:

“Strong growth, including our best quarterly like-for-like sales for nearly a decade, together with another special dividend for our shareholders, shows how new Morrisons can keep improving for all stakeholders. Morrisons continues to become broader, stronger and a more popular and accessible brand. I am confident that our exceptional team of food-makers and shopkeepers can keep driving the turnaround at pace.”

The service work had by the end of 2018 reached 16 stores. The approach was careful, about learning how to change the leadership style and the shared beliefs of the team so people really do feel good about their work and free to be generous in spirit and with food.

It is working, with customer service metrics significantly improved and colleagues voting with their feet – attendance in the 16 stores rose 1.7% creating 300 hours per store per week of extra time from colleagues. As a result in 2019 the programme is ramping up, expanding decisively across the 500 store estate but still in a way that is careful – you can’t just roll out this kind of culture.

Overall we are proud to have played a small but important part in Morrisons customer and colleague-led turnaround.