Morrisons looks set to ditch the big Christmas TV ad spot for a second year, instead opting to spend its marketing money on staff and own-label goods.
Morrisons is shifting more of its marketing spend from traditional media such as TV to “more cost-effective” channels, even though it admits this is at the expense of reach.
Speaking to Marketing Week at a press event this morning (12 September), CEO Dave Potts said Morrisons “always wants to get a bit more for less out of marketing”, but he would not confirm whether the grocer sees marketing as an investment or area to cut costs in the run-up to Brexit.
“At all times, given that this is a pretty low margin industry, you are always looking quite carefully at costs,” Potts said. “There is a shift in costs within marketing from more traditional media; digital media is more cost-effective. It may not have quite the [same] reach but it is certainly attractive to retailers to use that.”
With consumer confidence on the decline and shoppers becoming increasingly price-driven, Potts said it is important marketing is tailored and “points to how consumers are feeling”, whether that is around price, quality or provenance.
“Morrisons is quite a broad church and has a lot of things to talk about,” Potts added.
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But Brits can probably expect another low-key Christmas from Morrisons this year, with Potts saying he would rather spend the money on staff and own-brand products than a big Christmas campaign.
“This company does less on the big productions around Christmas, traditional TV advertising,” he says. “I’d be more inclined to put that money into pairs of hands in the store and I’d be more prepared to put that money into a notch up in quality and notch down on price in own-brand.”
Like-for-like sales at Morrisons were up 0.2% year on year in the first half of 2019, while revenue was up 0.4% to £8.83bn and pre-tax profit increased by 5.3% to £198m.
Morrisons has also expanded its partnership with Amazon to more cities as it eyes new opportunities in the ultra-fast delivery space and Amazon looks to grow its grocery business in the UK.
“As [Amazon] grows in this particular market we expect to grow too,” Potts said. “Our aim is for our brand to become popular and accessible across Britain, but that [has] to be done in a capital-light way, which is why wholesale is important to give us that reach.”