M&S store

The news that the current boss of Morrisons, Marc Bolland, is to become the new Chief Executive of Marks & Spencer brings to an end months of speculation in the retail industry about who would – and should – succeed Sir Stuart Rose. Though Bolland’s name had been mentioned as a possible candidate, the announcement comes as something of a surprise, with retail commentators suggesting of late that an internal promotion was more likely.

While the focus of news coverage is inevitably on what this appointment will mean for M&S, the question of what it means for Morrisons is equally significant, if not more so. When Bolland arrived at Morrisons in September 2006, the business was a mess, suffering from a severe case of indigestion after swallowing up its much bigger rival Safeway in March 2004. Though Sir Ken Morrison was undoubtedly a superb grocer, his team proved ill-equipped for the scale of the integration task that faced them, with the business posting its first ever loss - of £313m – for the 12 months to the end of January 2006.

Morrisons store at Redcar

Since Bolland arrived just over three years ago, the company has been transformed from something of a laughing stock into a darling of the retail industry and the city. The old garish black and yellow logo has been overhauled, store environments and ranges have been improved, and canny advertising has pushed the distinctive ‘Market Street’ concept as underpinning Morrisons’ reputation for both freshness and value.

In contrast, when Morrisons first took over Safeway, there was some snootiness about the predominantly northern retailer venturing into the south and Scotland, and a sense – not entirely unreasonable at the time – that Morrisons didn’t really understand the very different shopping habits of the Safeway customers that it had inherited.

In a sign of how perceptions of Morrisons have changed since then, it no longer stretches credulity to imagine the recent stars of the retailer’s adverts – such as Alan Hansen, Lulu, Nick Hancock or Richard Hammond – actually shopping at their local Morrisons (more than can be said for the shortlived Sharon Osbourne Asda ads…)

Given the challenges he inherited and overcame at Morrisons, Bolland seems like a good choice for the high-profile role of M&S CEO, where there is still work to be done in buoying food sales and sorting out the most tired outposts of the store estate that have so far missed out on refurbishment.

Morrisons store at Seaburn, Sunderland

In turn, the Morrisons job also offers notable challenges to whoever replaces Bolland. To date, Morrisons has had little or no presence in some areas of the market in which its main competitors – Tesco, Sainsbury’s, Asda, even Waitrose – have built up significant strength, such as homewares, online shopping, clothing and convenience stores. Compared to Tesco and Sainsbury’s, for example, Morrisons’ store format is relatively inflexible, with even the shops acquired from Safeway often struggling to offer as satisfying an instore environment – particularly around ‘Market Street’ – as the generally larger, purpose-built Morrisons stores.

None of this has mattered much while Morrisons’ sales have been buoyant, and market share has been growing. However, should the retailer’s growth stutter, Bolland’s successor will have to address whether Morrison’s existing store formats, and clear but relatively narrow focus on being “the food specialist for everyone”, are really the most effective way forward in a highly competitive market.