Morrisons Supermarkets function as a food retailer in the United Kingdom. The firm operates in-store and online grocery retailing. In addition, the company is the fourth largest competitor in the U.K. supermarket industry. The enterprise has been trying to stand firm by engaging in price wars. This is because there is hectic competition in the retail market (Wm Morrison Supermarkets PLC 2005). The presence of Aldi and Ildi has brought competition in the retail industry. Price wars and differentiation have been some of the tactics used to outdo each other in the market. However, since price wars have become ineffective, the company focuses on value, freshness, and service alongside providing products at the lower process. The firm is a powerful player in the respective market through production, packaging, distribution, and transportation. The company has in the history acquired the largest rival (Safeway).
Location of The Mega Stores And Local Shops
The company focuses on placing its stores in strategic places. The strategic place includes those places that the other companies have not established their roots. The stores provide products based on consumer segments, for instance, based on age. The stores are located to address the age concerns of the consumer segments. Those stores in the local neighbourhoods have products that are fresh, convenient, and cheap (Niemeier 2013). In addition, the location of the stores is based on the classes of the clients. Most stores in the urban centres cater for the interests of the rich people. Those stores in the remote areas are used to cater for the needs of the poor people and middle-class people.
Partnership with Amazon
Since Morrison has seen a reduction in profits due to the failure in online retailing, it has entered into a partnership with Amazon to deal with this challenge. The partnership will be strategic since it will see Amazon offering online purchasing and delivery services in the UK grocery market (Prasad 2015). Morisons will take advantage of the Amazon’s online and logistics capabilities to offer value-driven products.
Prasad (2015) gives that Morisons supermarket is having a declining growth. Year by year, the company records a revenue fall by 4.13%. In 2014, the company’s revenue decreased from 16.82 billion to 16.12billion (2013). Looking at its debt, Morrison has a debt that has a total capital ratio of 36.98%. This figure is lower by 69.78% of the previous year. Morrisons is losing market share to Ildi since the firm is getting 10% of the market share (Kew 2005).
Other independent competitors such as Tesco are still dominating the market by pursuing product differentiation and spreading scope in the foreign markets (Zentes 2011). The reason for the decrease in revenues is that competitors such as Tesco promote home delivery, which is not entrenched in Morrisons. In addition, online shopping is heavily experienced with the Tesco than with Morrisons. Based on the place, Morrisons focuses on the urban centers.
Tesco and Aldi focus on the region away from the urban places. Morrisons considers dealing with the middle-aged people. However, Aldi and Ildi are concerned with both old and young. In terms of distribution, Morrison deals with the offline type of distribution. Tesco and other competitors major in both online and offline distribution (Plunkett 2007). Pricing strategies used by competitors are different from that of Morrison. Morisons deals with pricing that is based on the cost of production. However, competitors such as Tesco bases their pricing on the final income realised. Both in-house and out-house process are used by Tesco in marketing. However, Morrison deals with outhouse marketing where marketing strategies are evaluated from within. Physical evidence of the competitive edge of Tesco is given by the high number of stores in the urban and rural areas.
The company would consider online to able to reach the market. In addition, partnership with Amazon would be a better idea since costs will be shared. Furthermore, economies of scale will increase (Getz 2004). However, shortcomings of the partnership would be that profits would reduce due to the sharing of the net revenues. Another option is to open shops on the high streets. This would ensure that profits from the many urban centres are nurtured. In addition, it can rent physical space to be used to set other business stores.
Partnership with Amazon
Partnership with Amazon would be the last resort since it will enable the firm benefit from the logistical skills of the respective firm. Although Morrisons has been in partnership with Ocado, it can have both of the partners in the business to increase the economies of the scale. However, a partnership with Ocado has not been very productive since Ocado does not have the logistical skills to be used in online marketing (Zentes 2011). Therefore, the pull factor to Amazon is its logistics expertise and experience. Having both partners would also be pertinent to cover up costs such as marketing.
Conclusion and Recommendation
It would be recommended for Morrisons to enter into a partnership with Amazon. Employing the logistic skills of the Amazon, Morisons would be able to go online to market its products. Going online would be important to reach the market within short time possible (Hitt 2013). It should be recommended that the company should rent its physical space. This would enable the construction of other stores in space. The business would benefit from such renting by increasing revenue in its budget.