Morrisons 'all things to all men'

Morrisons's takeover of Safeway could put it in a position to be "all things to all men", but the store must tread carefully, analysts warn.

Paul Corrigan, account manager at Taylor Nelson Sofres, said the takeover will give Morrisons a share of 13-15 per cent of the market and will mean that three retailers will control more than 70 per cent of the fresh produce market in the UK, putting increased pressure on suppliers in terms of prices and product ranges. "In terms of supply to the new Morrisons, I would imagine there are a large number of suppliers facing opportunities and threats simultaneously," said Corrigan.

David Pattison of Plimsoll Publishing believes that there are also opportunities even for suppliers losing out following the Morrisons takeover. "A lot of companies have got smart to exposure to the supermarkets and have developed supplies to caterers, hotel and pub chains," said Pattison. "We are seeing more and more hedge their bets and move towards the catering sector which is offering increasingly attractive contracts."

Morrisons also needs to consider the profile of the shoppers it is inheriting, warned Corrigan, as Safeway shoppers are more upmarket with a different age profile. "Morrisons needs to decide whether its strategy will be to retain these buyers or stamp its mark on all stores and attract shoppers that have traditionally bought in Morrisons," he said.

Each retailer has different strengths in the produce field, said Corrigan with Morrisons stronger in top fruit, bananas, brassicas and root vegetables and Safeway in citrus, legumes, salads and tropical fruit. "The takeover could put Morrisons ina position to be all things to all men," said Corrigan. "The threat to suppliers could then be minimalised as if Morrisons chooses to retain existing Safeway customers and finds its customers require something different to what was available before. They may find that they have to source different products depending on the regionality of those stores and existing supplier s to Safeway could find they are still required."

In the long-term, turning Safeway's performance around will be crucial to Morrisons, but the store may have to accept that in the short term it could see its growth rate reduce.