So….Convenience – done the Morrisons way…

Convenience is something that Morrisons should have been doing a while ago according to the analysts along with online and the like, you could argue that Dalton has bowed to their pressure somewhat with his announcements regarding the convenience trials, Fresh Direct and their taking of 10% of the business. Very much doing things their own way, rather than acquiring Ocado or setting up a dark store, it’s taken a stake in a successful similar retailer and is learning thoroughly about how to make it work in the UK.

The stance is to be admired and resonates with Sir Kens words when taking over Safeway – ‘we plough our own furrow and tend not to be too concerned with what anyone else is up to’. Whilst the competition have moved on with their march into convenience and online, there are question marks over online profitability with the mults not splitting out figures and Ocado yet to turn a full year profit.

Convenience tends to be done in a ‘top up’ fashion with Sainsbury’s and Tesco buying up chains that are in urban residential areas and selling their top up wares via these outlets. Dalton remarked at the interims that he didn’t feel Fresh had been done in any convenience model at all well, I’d tend to agree as bar a few Ready Meals and a limited Produce offer there isn’t much else on offer bar the usual ‘top up’ offer.

Morrisons look to be doing the polar opposite and rather than looking for sites in the poorer areas, they seem to be targeting middle class affluent areas with Ilkley, West Yorkshire to be the first site of a 3 store trial, remarkable in itself as Ilkley are particularly proud of their town centre and vigorously opposed the new Tesco development recently albeit in vain as Tesco won approval upon appeal.

Since the Convenience areas were announced there’s been a bit of work by the Manchester correspondent regarding locations and the like via some backwards route the location was discovered but there was no mention of Morrisons on the initial application form, indeed we only discovered it was Morrisons when the license application went in.

Around a month ago I visited the Ilkley site to check on progress and try judge what the site would look like,I have also made another visit last weekend to sort of try and chart progress too.

Morrisons Ilkley site late April.

Obviously I had the benefit of the plans to see where certain things would be elevated and how Morrisons intended things to look, the site itself is a former Bradford College building and adult education centre which seems a bizarre transition to a convenience store but it’s deceptively large as a building.

Shop front (not the front for the Morrisons store though).

It’s interesting that Ilkley (and indeed Wilmslow, Manchester) have been selected as the first two trial sites in affluent middle class areas but in buildings you wouldn’t expect a retailer to take over, in addition it’s these locations that will support the business model that will focus around ‘fresh’ food and the fact that in a ‘M Local’ store will offer real fresh food for evening meal solutions rather than a ubiquitous ready meal or Pizza.

Although Tesco Express and Sainsbury’s local have been bolstered largely by acquisitions, some of their stores are in large housing estates and cater for the top up shopper rather than anything else. This is why Morrisons move into affluent areas is such a departure from the ‘norm’ with convenience. There are questions over the scalability of the model considering sites are at a premium in these areas but Ilkley is an excellent place to start.

It was mooted on this very blog that if online was launched there would be nothing to stop Morrisons having a butcher, fishmonger, confectioner and the like in a ‘dark store’ cutting up choice cuts of meat and fish for customer orders, it appears that they will go down this route and retain the classic elements of Morrisons but what about the convenience model?

It appears that the thinking is to offer the same points of difference that Morrisons is famous for in terms of freshly cut meat and fish, fresh food and Oven Fresh / Pies albeit on a much smaller scale. You can’t put ‘market street’ into a convenience offer but you can offer the same food that Morrisons foundations are built upon. Honest affordable ‘fresh’ food but importantly – available, another challenge for the allocators at head office and store staff will be maintaining availability in a volatile market with real spikes in demand for warm weather especially with the store located near a densely populated housing area and large park.

A lot of Morrisons profitability is driven on margin of own label meat and fresh foods, especially with vertical integration allowing for increased volumes to be pushed through the supply chain at short notice, it’s this balance that will have to be struck ever so carefully with the convenience model in order to maximise sales but also be conscious of wastage and markdown.

To overcome the barriers in terms of food preparation for convenience, it appears that Keighley will be a satellite store for Ilkley and will take on the role of preparation of Meat and Fish along with some in store baked lines. I would anticipate that the Pies and Pasties will be baked off in store but the ‘craft’ products will be delivered into store from Keighley.

Morrisons job advertisement – ( C ) Jobcentreplus.gov

Which does make sense, with the store being a trial there is likely to be a lot of short term change as the range churns, customers request certain lines and it makes sense to take it out of the main supply chain and supply it via a local store via interception from head office and local management. The store will be supplied by a 7.5t vehicle which will please local residents and also simplify the goods in process.

The new ‘identity’ for Morrisons convenience estate (c) Morrisons.

Artists impression of the new entrance and car park to M Local (c) Morrisons Supermarkets Plc.

The branding of the store has been resolved and after several ideas and logos were floated – ‘M Local’ was decided upon as the convenience arms’ identity, and plans have been submitted for Ilkley to have it’s signage installed once the  building conversion is completed.

The main giveaway for this development was the fact that the licensing application was submitted requesting the usual 6am – 11pm license for convenience stores, despite the Ilkley residents being pleased at Morrisons arriving, the retirement homes across the road have raised objections that sales of alcohol so late into the evening could cause anti social behaviour and increased levels of noise. I feel this is a somewhat spurious defence as there is not really much of a link between shops selling alcohol and increased noise and with so much focus on ‘think 25’ these days, a supermarket is not the place to go for alcohol if you are without ID.

With regard to the ‘finished’ store – work is ongoing but I am told that opening has been brought forward by a month so it’s expected to June / early July before the store opens. There has been some internal building work to shift the dynamics of the building so the entrance is at the back rather than the previous ‘shop front’.

The store entrance has been remodelled (12th May)

The picture above shows the new store entrance, at the top of blog you can see the initial work that had taken place but this shows the entrance developing. The windows to the left of the entrance were old style Victorian and these have now been replaced with modern double glazed units. The pictures were somewhat difficult to take as the site was closed when I visited and there was a shroud around the site which gives absolutely no indication that it’s anything to do with Morrisons.

New Windows – providing natural light into the store.

Side of store – proposed ‘fresh food every day’ sign on here.

The side of the store (above) and the ‘fresh food everyday’ writing artwork have been rejected by the local Ilkley planning committee citing it ‘unnecessary’ in a conservation area. I feel they’ve perhaps not realised it’s artwork on brickwork rather than a sign per se… However that doesn’t mean it will be rejected by Bradford Met council but it look as though Morrisons may have to re-submit their signage plans, interesting that the notes indicated the committee would approve the plans if the artwork wasn’t part of the plans.

So, it’s all systems go for Ilkley as it becomes the first convenience store in the Morrisons estate in the next couple of months, with their late entry into the market and Daltons fresh eyes, it looks as though they’ve learnt from the competition and will use their strengths in fresh food to do things a little differently and shake up the conventions for ‘top up’ shopping.

Whilst Ilkley progresses well, the plans are also in for the affluent borough of Wilmslow, which is another area to meet the Morrisons convenience ‘spec’ with an office building next to the Aston Martin garage.

With thanks to the Manchester correspondent (who was responsible for most of this article!) he went along and took some photographs of the site – this is far more difficult to see where the store will feature, I have to say since looking at the plans, it’s not much clearer at all.

The building is a former office block and looks very much like one.

On the road – note the Aston Martin garage next door.

Main entrance to the office block – it appears this won’t be used.

I’m informed that the local residents are less than impressed with the proposals due to the license application striking fear into the village that there will be drunks on each street corner with late opening hours. Also there are concerns over the parking spaces and the availability of them when the store is open. All worthwhile concerns but these have to be taken into context, it’s not a major supermarket rather a good sized convenience store which will provide trade for the area.

It’s interesting that with the former Safeway stores sold to Netto via Morrisons when they took Safeway over in 2004 and subsequently bought back in 2011 from Asda/Netto, the disposals reared their head again with the M local entry into Wilmslow which was a relatively good performing Safeway store – sold to Waitrose due to size constraints.

In terms of the building that Morrisons have, it’s a good sized floor space and the intention is to have the offices on another level upstairs but sales floor and warehousing on the one level. Plans are in for the adjustments but nothing has been approved yet.

It looks positive for the future in terms of the areas that Morrisons are moving their convenience model into, with spaces at a premium in many towns and cities. It looks as though the less conventional sites will be adjusted for a convenience model, certainly the two areas featured here are a former adult education building and an office block.

The trial will be similar to Kirkstall in that things are adjusted weekly and there will be questions over operating models, especially with the ordering system, I imagine it will be manual ordering on the Grocery side of things with a close eye being kept by SMS sales managers on the Fresh lines along with manual intervention from the ground troops regarding the picture for bake off / scratch lines that are delivered in.

I’m led to believe that Liverpool is a new build aimed at commuters and the correspondent is on with the hunt!

Next time out – bit of a look at the Victoria, Bradford hot fresh sandwich / pizza counter trial… If you’re in the area, highly recommended hot beef sandwich – outstanding value at £1.99!