Retail Insight Network

Convenience stores key as Morrisons reports modest Q2 growth, says GlobalData

Analysis of the UK-based supermarket chain follows Morrisons’s Q2 figures for the 13 weeks ending 30th April 2023.

As supermarket chain Morrisons reports modest Q2 growth, senior retail analyst Eleanor Simpson-Gould at leading data and analytics company GlobalData offers her viewpoint.

Simpson-Gould says: “Morrisons has announced positive like-for-like (LFL) group sales for the 13 weeks ending 30 April 2023, with the Q2 result building on a marginal 0.1% return to growth in Q1.

“However, the growth falls far short of the latest quarterly LFL updates from rivals: M&S’s +9.2% LFL food sales growth for the 13 weeks ending 1 April 2023 and Tesco’s +8.2% Q1 results for the 13 weeks ending 27 May 2023.”

Morrisons's loyalty scheme and convenience stores are vital following Q2 results

As confirmed by former Sainsburys CEO Justin King, competition is fierce among UK supermarket chains.

However, Simpson-Gould asserts that there is hope for Morrisons: “In an effort to keep pace with rivals, Morrisons has joined the battle to pro-actively cut prices whilst ramping up its loyalty scheme efforts to retain position following an overtake in market share from Aldi.

“With Morrisons being slow off the mark to relaunch the More loyalty scheme in reaction to the cost-of-living crisis, this is nonetheless a step in the right direction. The grocer must offer shoppers a compelling reward to tempt them away from Tesco and Sainsbury’s established and popular schemes.”

Further analysis of the wider retail sector by GlobalData finds that such loyalty schemes enable retailers to attract new customers and gain valuable insight into shopper behaviour.

In Morrisons’s case, Simpson-Gould concludes: “With limited options to boost trading through its core supermarkets, sales growth through a growing convenience estate will be vital to lifting its performance.

“Helped by the recent conversion of McColl’s stores, Morrisons now has opened almost 650 Morrisons Daily stores and expects to have almost 1,000 stores trading by year end. Such investment will make it a major player in the channel but maximising the performance of these stores requires a different skillset to its core business. Morrisons will need to be agile and highly customer focused to compete effectively.”