Wm Morrison Supermarkets — Corporate Update (October 2009)
47 slides from Wm Morrison Supermarkets's corporate update, Oct 19, 2009
Slide 1: West Sussex & Sittingbourne Investor Visit
West Sussex & Sittingbourne Investor Visit 19 October 2009
Slide 2: Agenda
Agenda 2 • Welcome Niall Addison • Setting the scene Marc Bolland • Smaller stores Mark Gunter • Store visits Brighton & Worthing • Lunch – new product development Eleanor Scott – customer insight Nigel Dodd • Visit to Sittingbourne – Logistics Neal Austin
Slide 3: Morrisons Smaller Stores
Morrisons Smaller Stores Mark Gunter Group Retail Director
Slide 4: Morrisons smaller store journey - Erskine
Morrisons smaller store journey - Erskine 4 • 24,800 sq. ft. new store - opened September 2007 • Learning – optimising range and space ▪ 82% of full sized Morrisons range – full offer smaller footprint ▪ includes all of Market Street Erskine – look & feel ▪ still clearly a real Morrisons ▪ trial of
Slide 5: The smaller stores journey - individual opportunities
The smaller stores journey - individual opportunities 5 • Gorleston (Somerfield) 17,300 sq. ft. - opened September 2008 • Clifton (Co-op) 17,200 sq. ft. - opened November 2008 • Re-opened – previously closed Clifton Safeway stores – Northallerton 11,500 sq. ft. - opened October 2008 – Blandford 13,6
Slide 6: Morrisons smaller store journey - opportunity
Morrisons smaller store journey - opportunity 6 • Co-op/Somerfield stores (Project Sweet) – average size 14,100 sq. ft. (21 below 13,000 sq. ft.) • Tailored look & feel to Market Street • Maintain our strengths – fresh – value – service • High fresh food participation • Same attention to customer se
Slide 7: Somerfield/Co-op - transition programme
Somerfield/Co-op - transition programme 7 • Programme delivered in 3 months – set up experienced cross divisional team – experienced Morrisons SGM’s – one off integration costs £30m – total capital investment £320m • Closed c. 12 weeks – full Morrisons décor & branding – Consistent with fresh, value
Slide 8: Smaller stores - objectives
Smaller stores - objectives 8 • All stores opened have meat & fish counters and a bakery offer • Bespoke range and segmentation for each store • More focus on fresh food • Market Street specifically targeted to local catchment and store economics • Range densities maximised through specific equipmen
Slide 9: Typical example of a smaller store offer
Typical example of a smaller store offer 9 OVEN BUTCHERY & BAKERY & CAKE SHOP DELI & FRESH PREP BAKED FRESH FISH FRESHFOODS FRESH FOODS BEERS, WINES & SPIRITS FROZEN FOODS PRODUCE AMBIENT FRESH FOODS CIG KIOSK AMBIENT CIG KIOSK FRESH LOBBY AMBIENT FOODS CHECKOUTS Section Dept sq. ft. % Space Section
Slide 10: We maintained our strengths
We maintained our strengths 10 • Pricing – operate the standard Morrisons price structure • Promotions – support the corporate promotions for ranged products • Local management – strong department ownership – stores fit into existing operational structure – maintain traditional store ordering method
Slide 11: Smaller store offer – operational efficiencies
Smaller store offer – operational efficiencies 11 • adjacent fresh counters • self scan checkouts • staffing & structure refined for • where appropriate not a 24 hour each store operation • deeper shelving • shelf ready merchandising • dual skilling • Maintain strong value message through promotiona
Slide 12: Performance – key highlights
Performance – key highlights 12 In general terms store operating in line with our expectations. Very early days but we are pleased with initial performance • Stores are achieving a 50% sales uplift • Prices are on average 15% lower than previous owners • Basket size reflects a full rather than a top
Slide 13: What you will see today - Worthing
What you will see today - Worthing 13
Slide 14: What you will see today - Worthing
What you will see today - Worthing 14 • Previously a Co-op with limited facilities • 24,700 sq. ft. – largest store we acquired • Competitive environment in the catchment – 20,000 sq. ft. Waitrose, – 30,000 sq. ft. out of town Sainsbury’s – 35,000 sq. ft. Tesco • We added: – meat & fish counters – b
Slide 15: What you will see today - Brighton
What you will see today - Brighton 15 • Previously a Somerfield with most departments removed • 13,400 sq. ft. • Competitive environment in the catchment – 49,000 sq. ft. Asda – 40,000 sq. ft. Sainsbury’s – 4,500 sq. ft. Tesco Express • We added: – meat & fish counters – bakery – deli & oven fresh c
Slide 16: Smaller stores summary
Smaller stores summary 16 • Our new smaller stores have started well – most have been open for less than 3 months • Initial trading has delivered 50% uplift over previous ownership – customer acceptance has been very positive • Market Street a key difference • We have the skills, experience and conf
Slide 17: New Product Development
New Product Development Eleanor Scott Head of New Product Development
Slide 18: New product development
New product development 18 MARKET STREET BENCHMARKING BENCHMARKING FILL THE GAPS Deliver new and exciting Industry leading quality We ensure our ranges products for our are continuously evolving customers & comprehensive
Slide 19: Fresh In
New for 2010 19 Fresh In at • A celebration of new products in store, delivered by the expertise of our Market Street specialists • Provides a call-to-action by giving customers a reason to come to store
Slide 20: Keeping Market Street fresh
Keeping Market Street fresh 20 • What we do well – quality, value and fresh – in store preparation – fresh Market Street is a key driver of our fresh message next year
Slide 21: Benchmarking - quality
Benchmarking - quality 21 • What makes us different? – every retailer benchmarks everyone's quality • We think: – how would it taste at home? – especially with British food? – go back to basics….
Slide 22: Customer Insight
Customer Insight Nigel Dodd Insight Director
Slide 23: What I'll cover
What I’ll cover 23 • The Morrisons journey 2006-2009 • The customer story of the last 12 months
Slide 24: Customer perceptions - 2006
Customer perceptions - 2006 24 ….performance versus Source: Oliver Wyman other big three Staff & store Key: Average of other big three Choice Morrisons 2006 Product quality Value M weaker M stronger score
Slide 25: Customer perceptions - 2006 to 2009
Customer perceptions - 2006 to 2009 25 ….performance versus Source: Oliver Wyman other big three Staff & store Key: Average of other big three Choice Morrisons 2006 Morrisons 2009 Product quality Value M weaker M stronger score
Slide 26: Even people who don't shop with us recognise that we lead the market on fresh
Even people who don’t shop with us recognise that we lead the market on fresh 26 “They source, produce and prepare “They’re committed to giving a lot of their own fresh food” customers the freshest food possible” Morrisons Market
Slide 27: Growth of the estate has increased households with access to a Morrisons store
The growth of the estate has increased the number of households with access to a Morrisons store, particularly in The South 27 2008 No. of 2009 No. of % Region Households Households Change • New store (000’ (000’s) (000’ (000’s) East Anglia 413 433 4.8% East Midlands 1,411 4,429 1.3% Greater London
Slide 28: Market Street has been successfully integrated into the smaller format
Market Street has been successfully integrated into the smaller format 28
Slide 29: Morrisons is attracting new spend especially from affluent and younger demographics
Morrisons is attracting new spend especially from affluent and younger demographics 29 Morrisons turnover growth 52 w/e Sept 6 2009 - % chg 14 12 10 8 6 4 2 0 Total ABC1 C2DE 16-44 45+ TNS WorldPanel, Till Roll
Slide 30: Market Street counters a key reason for choice amongst Morrisons shoppers
Market Street counters a key reason for choice amongst Morrisons shoppers compared to the market average 30 Reasons for Store Choice - Morrisons Has Butchery Counter 133 Has Fresh Fish Counter 115 Has A Delicatessen 108 Has In Store Bakery 104 Always Low Prices 101 Good Value For Money 100 Like Stor
Slide 31: Fresh fish counter – Morrisons leads its other mainstream competitors
Fresh fish counter – Morrisons leads its other mainstream competitors 31 Reasons for store choice – there is a fresh fish counter Waitrose 134 Morrisons 115 M&S 111 Tesco 104 Sainsbury 103 Asda 97 On-line Questionnaire - Outlet Share Index 52 we Aug 9 2009 TNS WorldPanel, Till Roll
Slide 32: New shoppers are more “foodie”
New shoppers are more “foodie” 32 New Morrisons shoppers – attitudes (% agreeing) 39.3 38.3 36.7 28.4 26.3 24.4 11.0 9.8 9.2 I am a good cook I regard myself as a food I enjoy cooking connoiseur New Morrisons shoppers Morrisons average National average TNS WorldPanel, Till Roll
Slide 33: New shoppers – more ethically concerned
New shoppers – more ethically concerned 33 New Morrisons shoppers – attitudes (% agreeing) 34.7 31.9 31.8 14.5 12.8 13 I try to buy local produce I make regular use of recycling facilities New Morrisons shoppers Morrisons average National average TNS WorldPanel, Till Roll
Slide 34: Premium and value lines are a barometer of consumer confidence
07 - 04 Oct 0 50 100 150 200 250 300 -N -07 02 ov -D -0 4 we sales 30 e c 7 -D -07 27 ec- TNS WorldPanel, Till Roll -Ja 07 24 n confidence -F -08 23 eb -M -08 20 ar -A -08 Value OL 18 pr -M -08 15 ay- -Ju 08 13 n-0 10 -Jul 8 -A -08 07 ug- -S 0 05 ep 8 - -0 Premium OL 02 Oct 8 -N -0 30 ov 8 -N -08 28
Slide 35: The Journey to Sittingbourne
The Journey to Sittingbourne Neal Austin Logistics Director
Slide 36: Start of the Logistics Optimisation Plan
Start of the Logistics Optimisation Plan 36 2006 – Logistics Network • Post Safeway a number of depot disposals had taken place • Overly complex network • Imbalance of capacity • Transport inefficiencies • Reliance on multiple legacy systems with a high degree of manual input • High level of store s
Slide 37: Logistics Optimisation Plan
Logistics Optimisation Plan 37 Principles Priorities Improve cost effectiveness Consolidate the South West Create capacity for growth Fill the gap in the South East High level of service to stores Improve pick and stock accuracy Benchmark our operation Take industry knowledge
Slide 38: Logistics Optimisation - progress to date
Logistics Optimisation - progress to date 38 • 2007 – Opened Swindon depot serving South West with ambient; previously serviced from Northampton – Transferred national ranges into Northampton from Tamworth – Disposed of Tamworth – Improved service through reduced lead-times and reduction of store mi
Slide 39: Logistics Optimisation - progress to date
Logistics Optimisation - progress to date 39 • 2009 – Opened Sittingbourne, filling the network gap in the South East – Store ramp up to 63 stores by Q1 2010 and associated network re-alignment creating additional capacity throughout – Reduction in transport to stores of 22m km per annum (17,000 ton
Slide 40: Reducing our pick errors through voice
Reducing our pick errors through voice 40 Pick error rate Voice pilot at Corby Pick error rate % P1 / 08 P2 / 08 P3 / 08 P4 / 08 P5 / 08 P6 / 08 P7 / 08 P8 / 08 P9 / 08 P10 / 08 P1 / 09 P2 / 09 P3 / 09 P4 / 09 P5 / 09 P6 / 09 P7 / 09 Pick error rate Baseline
Slide 41: Logistics Optimisation by 2011
Logistics Optimisation by 2011 41 • Complete the voice pick roll out • Complete the store re-alignment as a result of Sittingbourne • Pilot and begin roll out the new warehouse management system • Build and begin operations at Bridgwater (mid 2011 first goods out to stores) • Rationalise the existin
Slide 42: The impact of the Optimisation plan by 2011
The impact of the Optimisation plan by 2011 42 2011 – Logistics Network • Simplified network • Cost efficient operation • Capacity for growth in support of ‘National to Nationwide’ • Robust management systems • Consistent ways of working • Better store service
Slide 43: Network October 2009
Network October 2009 43 420 stores Bellshill 57 stores Stockton 30 stores Gadbrook Park Wakefield 73 stores 67 stores Latimer Park 76 stores South West 75 stores Droitwich – Chill Bristol - RRU Yate – Produce & Grocery Swindon – Grocery Sittingbourne Willand – Chill & frozen 42 stores
Slide 44: Sittingbourne RDC
Sittingbourne RDC 44 • Total investment of £108m (inc freehold) • 2009/10 start up costs of c.£6m • 900,000 sq. ft. facility in 2 units on 49 acres • 53,000 pallet spaces • c. 11,500 products • 1,600 deliveries to/from stores each week • Throughput capacity in excess of 2m cases per week • Headcount
Slide 45: Sittingbourne RDC
Sittingbourne RDC 45 • Leaner management structure • New style Trade Union Agreement with USDAW • Site launched on Voice Picking • New uniform • Greater colleague engagement
Slide 46: Site tour
Site tour 46 • Site orientation • Health and safety on site • Guided group tour • Q&A / close • Transport to station
Slide 47: MORRISONS
MORRISONS
Wm Morrison Supermarkets — Corporate Update (October 2009) on 6ix