Morrisons, the UK’s fourth-largest grocer, today (10 September) claimed some early signs of success from the first batch of remodelled Co-operative Group and Somerfield stores.
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The company, which snapped up 38 Co-operative and Somerfield stores in December, said some 19 of the outlets were opened during the first half of the year.
The additons to the Morrisons estate are generally smaller than the stores that the retailer has historically run and industry watchers have questioned whether the company could succeed with a different format.
However, chief executive Marc Bolland said the remodelled stores had seen sales rise by 50%, while prices were lower than under the previous banner. Bolland also revealed that basket data had suggested consumers were using the outlets for a full shop, rather than a top-up shop.
“These are not convenient shops but this is convenient shopping,” Bolland said as Morrisons reported its half-year results. Bolland said that the smaller stores still include Morrisons’ Market Street concept of an in-store fishmonger, butcher and baker and a range of fresh food. “The shops are designed for a full shop,” the Morrisons boss added.
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By GlobalDataMorrisons plans to open a further 15 former Co-op or Somerfield stores in the second half of the year and Bolland argued the company’s early success with the first batch of outlets demonstrated the retailer’s ability to run shops of different sizes. “We’ve got an opportunity to move on a far larger footprint,” he said.
Morrisons, which in March identified more than 100 potential sites for new stores, refused to be drawn on the number or exact size of outlets it was looking to acquire or build. However, finance director Richard Pennycock insisted the retailer had the financial flexibility to expand its estate further. “Our head-room is significant,” he said.
Morrisons, meanwhile, warned that its sales growth may slow in the second half as it lapped last year’s high growth rates and food prices began to fall in certain categories.
Shares in Morrisons dipped 0.18% at the close of trading to 284p.
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