David Potts “hits the ground running” according to analysts

DAVID POTTS has made headlines practically once a week since he started as Morrisons chief executive on March 16.

Major staff cuts and hires, culling senior management so that 70% of the management team he inherited has been cut, and making step changes in the culture at the firm from instore to HQ.

But will his efforts from the minor changes such as mixing up the playlist in store, to creating 5,000 in-store jobs, actually make a difference when its competitors are steaming ahead?

Clive Black, a retail analyst from Shore Capital, specialising in the grocery sector said: “David Potts has hit the ground running, and it shows he has clearly done a lot of preparation going into Morrisons.

“Morrisons has been a story of considerable contraction and decline. They can’t afford slow and steady change, they need sizeable, immediate change, and Mr Potts is making difficult but necessary decisions.

“He’s decided that the culture at Morrisons isn’t right, the management team and retail offer aren’t working.

“The departure of Casper Meijer because of his untenable position is an example of this. When a main director spends half the week in The Netherlands, that situation needs to be resolved one way or the other.”

Analyst James McGregor from Retail Remedy, writing in Retail Week, said of past management decisions: “Convinced of their invincibility – some more than others – they hired heavily within management to symbolise their retail hegemony.

“Hell, in the nineties and early noughties these giants of the grocery world created centralised command structures that would make Stalin turn his head in awe.

“Today’s supermarkets now understand that the heavier you are up the hierarchy, the longer it takes to get anything done – and this can really hurt you.”

Mr Potts has scrapped a digitised queuing system, as well as putting the emphasis on in-store staff and customer service, and Mr Black believes this will materially change the embattled supermarkets’ future trajectory.

He said: “It’s not easy decisions he’s making, an no one takes joy in this but the situation would be prolonged if no one did anything about it now. He’s dealing with the foundation of the problem which is management. He needs a team in place that is fit for purpose.

“He needs to set a tone – either you’re with me or you’re not with me, all about the stores and the customers, it was bloated and ineffective changes at the centre necessary to give in-store experience

“Mr Potts is doing the heavy lifting right now, creating preconditions for growth and to materially change the culture of the business.

“He is giving remaining staff more accountability more empowerment and responsibility to run the business better.

Mr McGregor said: “In truth, if retailers, such as Morrisons, manage their change correctly then customers really won’t notice a massive difference; this is more about removing wasted hours that never impact the customer. It’s back-office stuff, not front.”

Mr Black said: “These changes might mean nothing to Morrisons shoppers today but it will in the months ahead – he’s basically making Morrisons simpler, to make it quicker and better.

“He’s got a long to do list and I don’t think we should focus on the cuts at HQ – he is, after all, creating another 5,000 jobs across the stores.

“With these 5,000 new recruits, we’re probably going to be seeing cleaner stores, better product availability and merchandise, and people will get through checkout quicker. These things will be seen and recognised by customers.

“There are lots of decisions taken that will directly affect the customer. Getting behind the scenes things sorted – will allow him to sort out the front of store.