Morrisons ‘missed’ Black Friday halo effect at Christmas, says Potts

Potts said the absence of its ‘Black Fivedays’ deals in 2019 removed “an important springboard” to boost Morrisons’ sales during the crucial Christmas trading period – and he said the grocer “probably relied” on the halo effect from the promotion “more than we had assumed”.

Over the previous few years, Black Fivedays promotions had offered shoppers larger, better-value pack sizes on a variety of key grocery lines, which customers often stocked up on ahead of Christmas.

Potts said he would now “reflect” on the decision to scrap those deals in 2019 after Christmas sales slipped.

He said: “Traditionally we’ve used Black Fivedays as a springboard towards our Christmas trade and we chose this year not to be involved in that. When I talk a little bit about learnings, that’s one of the things for us to reflect on because we have probably relied on that springboard toward Christmas a little bit more than we had assumed.

“I will reflect on whether Black Fivedays is the answer to that springboard, or whether there are other competitors’ answers. But I think it would be in the mix.

“Whilst Nutmeg clothing is doing very well and we are building, quietly, a home and leisure business of general merchandise, we are not big in those areas. In the absence of those in recent years, we have introduced our own Black Fivedays with bigger packs, better-value items and customers have tucked into them.

“It’s one of those things where occasionally you get a halo effect from promotions that you do and these are the decisions management teams make.”

The lack of a Black Friday promotion contributed to a 1.7% drop in like-for-like sales over the 22 weeks to January 5, though Morrisons did not break out performance for the shorter Christmas period specifically.

Potts conceded that the run-up to Christmas was an “unusually challenging period for sales”, at a time when shoppers usually trade up to premium food products and splurge in categories such as beers, wines and spirits.

He said: “Consumer confidence has been low over an extended period now. That continued throughout this period, where consumers were quite a bit more than savvy, they were quite cautious in their spending, with concerns around the macro environment – the country’s economic prospects – as well as their own personal finances.

“That prevailed and retailers then respond to that environment with more activities to get whatever spending is available, particularly on the run-in to Christmas.”

Potts insisted that, against that highly competitive and promotional backdrop, Morrisons had some “knockout” deals and prices during the festive period, highlighting its three bags of British vegetables for £1 and whole salmon at £5 per kilogram. He added that a “Christmas basket” of 400 items was £20 cheaper at Morrisons than it was a year ago.

However, while Potts said there was a “release valve in the stores and in the business” following the certainty delivered by the December election result, he expects the wider uncertainty around Brexit to persist and continue to drag on consumer confidence.

He warned: “There is going to be uncertainty in the market until Brexit becomes clearer. It’s sort of had a Christmas break, but it will be back.”