Bob Stott and Marie Melnyck are on a charm offensive, venturing south of the Midlands to show that Wm Morrison's grand plan for rapid growth has not crashed and burned. The duo, joint managing directors of the Bradford-based chain, are showing off their new Milton Keynes store - 57,000 sq ft of former Safeway megastore.
Mr Stott's patter is convincing: "We are the best fishmonger... we have a really super light bulb business... these banana racks are unique..." It does, indeed, look good enough to eat.
Little more than two months ago, the idea of Morrison trying to win friends and influence people was laughable, but that was before the profit warning that brought to an end 37 years of sales and profits growth. Chairman Sir Ken Morrison said profits would be "substantially lower". Analysts reckon that means 33 per cent less than the £590 million (€868 million) previously expected.
The damage has been inflicted by Safeway, the 480-strong chain that Morrison battled to buy for 14 months and spent £3 billion to acquire. It was to be a transforming deal, which would enable the merged business to march into the number three position in the UK supermarket league, elbowing aside J Sainsbury.
In reality, by the time Morrison gained control, the Safeway business was haemorrhaging sales. Safeway's strategy of loss-leaders to pull in customers and higher prices on other items had backfired. Shoppers had been buying only the special offers and going elsewhere for their weekly trolley-load. The higher "background" prices had therefore been jacked up further to preserve profits short term. It was clearly unsustainable.
Morrison had to bring forward price cuts that have cut the cost of shopping at Safeway by 10 per cent in an effort to win back 1.5 million lost shoppers.
Other problems included a weird system of extracting upfront payments from suppliers and a new accounting system installed by Safeway just weeks before its takeover, which was incompatible with Morrison. "At best," says Mr Stott, "that decision was cavalier."
He insists that the carnage is just "a hiccup", but an element of doubt has crept in, even among the grocer's fans, as to whether Morrison will be able to deliver on its promises.
Hence, the Morrison two have descended on Milton Keynes to demonstrate what they can achieve with the Safeway estate. Converting the chain is a huge operation. Since July, the Bradford-based grocer has been revamping three Safeway stores every week and it plans to maintain that pace for the next two years.
Before each conversion, store managers are dispatched to existing Morrison stores to learn the way they do things in Yorkshire. Then staff have to be trained, store facilities upgraded and maintenance completed.
As a result of previous neglect, says Mr Stott, the repairs have been far greater than expected: so much so that the average cost of each store revamp will be £1.5 million, £500,000 more than expected. Milton Keynes cost £2 million. But Mr Stott insists the budget can absorb the extra costs.
Staff - lots of them - are being hired. Safeway ran a very lean operation while Morrison is far more labour-intensive as many products are put together or finished in store: sandwiches and salads for sale in the shop or the cafe are made on the premises, cream cakes are filled and pizzas are topped. At Milton Keynes the number of employees has gone from 374 to 600.
Each store is closed for three days and four nights for a full transformation, which includes everything from its signage to the precise location of the famous pie counter.
The results from conversions look good, with sales up more than 30 per cent. But the bald figures are misleading. Mr Stott admits they "cannot be typical", because the first conversions were in towns where Morrison simply moved into a larger or better former Safeway store.
In Milton Keynes, and probably hundreds of other stores, there is a mountain to climb. Sales just before conversion were down 25 per cent from their peak, so Morrison needs to increase sales by 33 per cent just to get back to where Safeway once was.
A 600,000 sq ft distribution centre has been opened in Northampton to help stock the revamped Safeways. The number of lines stocked has grown from 20,000 to 22,000, as the Morrison buyers have cherry-picked winners from Safeway's old 30,000-strong product catalogue. Morrison has also adopted entire Safeway ranges, including its "Eat Smart" healthy options and its "The Best" premium foods.
Mr Stott is at pains to point out that Morrison's reputation as a pile-it-high-sell-it-cheap retailer is misleading. "Look at this range," he says, admiring a vast selection of olive oils to underline Morrison's food credentials.
But you can't take the Yorkshire out of Morrison for long. Does Mr Stott worry that Morrison is not a renowned wine seller? "We'd rather get on with selling it." Do they stock any of the more exotic meats, such as ostrich? "No. We tried it. It didn't work." What about the very limited non-food ranges? "We will sell you a kettle or an iron," says Mr Stott, "but if you want a TV will you please go elsewhere." - (Guardian Service)
