Business Report for Morrison Supermarkets Marketing

Morrison Supermarkets
Name
Institution
Morrison Supermarkets
Morrison is the fourth largest chains of supermarkets in England with an annual turnover of £16.1 billion as of the year ending 2016. This was a decline of 4.1% compared to the year 2015 (Allen, Piecy & Piotrowska, 2017). Such figures reflect the general good health of Morrison supermarkets which has been experiencing stiff competition over the last four years from the cost leading rivals such as Aldi. However, the CEO has been working all rounds to reverse the declining turnover rate through devising an ambitious plan to deal with the low-cost rivals (Mintel, 2016). The intent of this paper is to examine the wider environment in which Morrison supermarkets operates in, in-depth examination of the financial performance relative to competitors, main competitors and to make a recommendation to the supermarket’s management on the possible changes to adopt so as to regain their competitive advantage.
Part I: Market Analysis
Background information of Morrison Supermarkets
Morrison supermarket was established in 1899 by William Morrison who began as a merchant of egg and butter. He began with a small stall in Bradford market in northern England and led the way into a big hypermarket retailer in the later years. After opening the stall, Morrison opened other small chains in the nearby markets. In the year 1920, Morrison’s businesses had flourished and earned him enough capital to allow him to open a personal retail stores that provided counter service to the customers (Metzger, 2014).
In 1950, Morrison transferred the ownership of the business to his son who approached the business with a different perspective. He decided to transform the business from the small urban centre shops into a larger-scale supermarket in suburban and exurban locations. At this time, the developments of self-service shopping alongside branding of grocery products and packaging were increasingly becoming popular among the retailers. After realizing that the idea worked out, Morrison's son began to open up new stores in 1962. In 1967, the company went public by registering with the London Stock Exchange. The company raised more capital through offering shares and expanded becoming the largest supermarket in the region as of the 1970s.
During the 1990s, Morrison supermarkets began experiencing stiff competition from rivals who engaged in the promotion. Morrison did not adopt the idea of promotions and went on with its discount formula as well as clinching to the idea of displaying price tags on its products throughout the distribution stores. Prices were the same throughout the stores which gave it a competitive advantage over the competitors who varied product prices in stores. The company went international in 2004 with the successful opening of a store in Scotland. As of then, the company was having a total of 403 stores and employing more than 100,000 employees. As of 2016, the company operates 498 stores (Toms, 2015).
Products and Services
Morrison supermarkets deal in a wide range of household products. In its market street, the supermarket offers oven-baked, Deli, butchers, fish, fresh prep, bakery products, and cakes. It also offers pre-packed food. On its grocery, Morrison supermarkets offer frozen foods, health and beauty products as well as the toiletries. It also sells wines and spirits, national lottery products and tobacco kiosk. It also deals in home and leisure products (Morgan et al., 2017).
On the other hand, Morrison supermarkets have introduced various service lines. It offers petrol refuelling services to the customers through their petrol stations located near the supermarket. It also works with banks to offer financial services to the customers. Aside, Morrison supermarkets offer dry cleaning services to the customers.
External Analysis of the United Kingdom Environment in Which Morrison Supermarket Operates In Using PEST Analysis
The current market situation in the UK that affects the food and retailing industry comprises of the micro and macro environment. Macro environment entails the general level of the business environment which is composed of the more general environmental factors that affect all the supermarkets operating within the England’s market. Most of the macro environmental factors affect Morrison supermarkets and the rivals as well. To gain more insights about the macro level factors that affect Morrison supermarkets, it is imperative to subject these factors to PEST framework. PEST framework is used in identifying major external environment factors that affect the business, and these include political, economic, social and technological (Baker, 2014))
Political factors
Political factors encompass the government actions that have a direct or indirect effect on the functions and operations of Morrison supermarkets in the UK’s market. In June 2016, the UK’s government passed a referendum that saw them exit the EU market (Brexit). Economic experts predict that this move is likely to affect the economic and political upheavals in the country which would result in uncertainties of the UK’s economy given that they come real. The Brexit was not welcomed well and sparked a political turmoil across the UK. Scottish prime minister did not buy the idea, and most of the Scottish representatives had not voted for the referendum causing a conflict that is likely to affect the operations of the Morrison supermarket branch in Scotland (Douglas and Gross, 2016). Brexit as a political move would have various implications on the UK’s market. One is inflation of products prices which was experienced immediately the referendum was passed as a result of the weakened pound. If the pound is to devalue, imports would be expensive. Morrison s supermarkets sell most of the imported products, and this would affect their product prices which can reduce their sales and profits.
Economic factors
As a result of the Brexit, the pound sterling hits its lowest mark for the past 31 years against the dollar, (Toplensky et al., 2016). The immediate effect of depreciating the value of the currency has been inflation caused by the increased cost of raw materials, transport, packaging costs, and energy. The employees are likely to demand more wages, and all these costs affect the business operations. The UK has been experiencing high food consumer price inflation beginning in 2016 and has caused an increase in food prices (Davies, 2017). Heineken, for example, raised its brewer prices and the burden has been passed to the consumer. Rising commodity prices will reduce the consumer purchasing power leading to lowered sales for the supermarkets (Christopher, 2016). Luckily for Morrison, it has own manufacturing sites located in the UK and will least be affected by rising cost of imports and transportation.
Social factors
Social factors in the UK market involve demographic changes such as age distribution of the population. UK’s national statistics (2015) shows that the average median age has been going up since 1974 when it stood at 34 and now stands at 41 years and the people aged 65 and ...