Managing Innovation in Business: A Case Study of Morrison's in UK Retail Industry

This report conducts an innovation audit on Morrisons, a large scale supermarket chain operating in the UK, shedding light on its history of innovation, current technological capabilities, and future innovative prospects of the retail industry.

Managing innovation
in business

EXECUTIVE SUMMARY
The main aim of research report was to study the process of innovation which major
corporates use to conduct and scale their business operations in their target market and the role
that innovative technologies and operational tools play in enhancing the performance and
capabilities of a company. The UK's retail industry was chosen as the focus of this project as it is
one of the most competitive and volatile industries and Morrison's was used as the organization
of choice as it is one of the most innovative retail chains operating in UK currently.
Morrison's has been around for a long time as it was established in 1899 and it's major list
of historical innovations in retail were duly listed to establish the fact that it has always been a
leader in this industry when it comes to using innovative business tactics. SWOT and Value
chain analysis was also done on the company to gather information regarding it's internal and
external environment to understand it's current performance and standards of innovation. It was
found that majority of the threats and opportunities for Morrison's both can be solved with
creative and scientific methods of business innovation.
The report was concluded with brief information regarding the current outlook of the
retail industry in 2021 regarding the technological and innovative trends being used by market
leaders like Morrison.

TABLE OF CONTENTS
EXECUTIVE SUMMARY ............................................................................................................2
TABLE OF CONTENTS.................................................................................................................3
INTRODUCTION ..........................................................................................................................4
MAIN BODY...................................................................................................................................4
The Organisation and its Innovation History.........................................................................4
The Organisations existing Innovation Performance and Capabilities..................................6
The industry in 2021.............................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The 21st century retail business landscape is prone to disruptions at every operational
point of a trading enterprise and traditional methods of conducting businesses are outdated and
no longer effective in satisfying the growing needs of the modern consumers and shifting market
trends and demographics (Água and Correia, 2020). Finding innovative and creative ways of
undertaking routine operations is the way forward for success.
This report will conduct innovation audit on Morrisons which is a large scale
supermarket chain operating in the UK and will shed light on it's history of innovation, it's
current technological capabilities and the future innovative prospects of the retail industry.
MAIN BODY
The Organisation and its Innovation History
WM Morrisons supermarket which publicly trades as Morrisons is a supermarket chain
headquartered in Bradford, West Yorkshire, England and is a hugely successful retail
undertaking coming in as the 4th largest retail chain in the entire UK. It was founded in 1899 by
William Morrison hence the acronym 'WM' and it's success story in the UK retail industry has
been nothing short of legendary as it began as an egg and butter stall in Bradford's Rawson
market and as of 2021, the company has grown multifold all over England and employs an
approximate workforce of 110,000 while serving close to 11 million customers weekly. It is a
apart of UK's 'big 4' of the retail sector comprising of Tesco, Sainsbury's, ALDI and itself and
accumulates a 9.9% of the grocery market share thanks to it's 497 stores all over the country

(Wm. Morrisons Supermarkets PLC - Company Profile, Information, Business Description,
2022).
Apart from making key strategic acquisitions and all the correct and optimal market
moves in the retail sector, a major credit to the success obtained by Morrisons in a relatively
quick time frame in the United Kingdom has to be accredited to it's long running history of
innovation (Meelen,Doody and Schwanen, 2021). It has always focused on servicing it's
customers and undertaking it's routine operations in the retail and grocery department in the most
efficient and innovative way possible to gain competitive edge in the market and increase the
overall business profitability (Bhunnoo and Poppy, 2020). A brief look through some major
innovations it has made in the past will be mentioned using the concept of 4 P's of innovation
which include product where Morrison has always been an innovator when it comes to the
product it offers it's customers as it was one of the first companies in the UK to offer fresh food
products manufactured in a dedicated fresh food factory called 'Farmer Boy' in 1980. It also
pursued infant and baby care product offerings by acquiring Kiddicare in 2011 and built a
custom crafted premium range of food products for it's high end customers.
Morrison's has also changed it's process as it did not offer online avenues of retail for it's
customers but sensing the boom in e-commerce, it partnered with Ocado as well as Deliveroo
and took it's massive online platform to build innovative and fast paced grocery and food sales
channels. The company deals in a diverse amount of retail channels now.

Over time, Morrison's has changed its position as the way it caters towards their
customers and has also tried to innovate and change it's market position in retail industry
examples of which include it's home delivery initiative in 2014 and it's strategies to position
itself as the most affordable supermarket in UK thanks to cheap product ranges like Morrisons
savers.
The overall vision and missions of the company along with it's paradigm have also
changed over the years as Morrison's has smartly innovated it's logo, branding and framing of it's
marketing messages (Huang, 2020). Earlier, it was all about offering discounts to attract
customers but now the company has been focusing on being a green, sustainable supermarket
which provides healthier food options cheaply.
Illustration 1: Morrison's partnering with Deliveroo

The Organisations existing Innovation Performance and Capabilities
Morrison's current standing in the UK's retail industry is quite complex and precarious as
even though it has been rocked hard by the raging coronavirus and the instability caused by
Brexit, it has posted quite a decent recovery in terms of sales and revenue. Despite this, it has
still not managed to get ahead of it's competitors like Tesco and Sainsbury's in terms of brand
strength and grocery market share (Games, 2019).
PESTLE Analysis of Morrison's
A PESTLE analysis of Morrison's has been given below to better understand the external
environment of the company in a better way which is an analytical tool which dissects the
environment into different layers (Okumus, and et.al., 2019).
The political layer states the light of Brexit, the trade that Morrison's enjoyed with rest of
the EU has taken a hit as the company has also complained the of the new business policies
being taxing instead of rewarding. The coronavirus has wrecked havoc on the UK's economy
and Morrison's has posted huge losses which it still recovering from using special focus on
online delivery channels. The company has still posted losses despite sales being robust.
Illustration 2: Morrison's new food delivery bag

Morrison's has shifted it's retail cost towards food offerings and being more socially aware as it
has decided to service and look after the citizens which have bore the full brunt of the pandemic
and it has also doubled its CSR efforts towards the same. The company has been looking quite
robsut in terms of its equity which is befitting of its huge stature in the retail industry of UK
(Monteiro, 2019).
The company has been actively looking towards technological integration of automation
and AI in its supply chain and stores to better service consumers and prove them non-contact
delivery and shopping options. Morrison's has enjoyed good legal goodwill and governmental
support despite being accused of shady practices in the past. It must ethically source its raw
material needs and should follow all COVID-19 guidelines in place. Morrison's is actively
working towards making the world a cleaner place to live in as it is controlling it's emissions and
has been named as the most environmentally responsible company in UK.
Porter's 5 forces analysis
Porter's 5 forces is another popular strategic tool used to measure the power of external
forces which exist in an industry, a viewpoint based on Morrison's is highlighted below.
Competition in the industry is high as the competitors of Morrisons are high quality
supermarket chains which are all looking to make a comeback in the post pandemic retail market
(Bhattacharyya, 2020). Potential of new entrants is low because the UK retail industry requires
Illustration 3: Morrison stock taking hits despite Christmas
sales growth

intense planning and huge investments to order and sustain business Power of suppliers is
Moderate as after the pandemic, suppliers depend on outlets like Morrison's to pick their orders
in bulk but Morrison's also depends a lot on it's suppliers as its reporting shortages in many
product lines.
Power of customers is high since retail is an entirely customer oriented sector and
product lines introduced by Morrison's have high chances of failure if customers do not like it.
Availability of substitute products is high as all the major supermarket chains of the UK have
hundreds of different product lines at varying price rates. Morrison's each product offering has
multiple alternatives available with its competition like Tesco and ALDI (Pantano and Vannucci,
2019).
In order to better understand the current capabilities and modes of innovation that Morrison's has
including it's strengths and weaknesses, a SWOT analysis has been given below.
Strengths
Superb success in finding and penetrating new
markets due to it's penchant for innovative
strategies and acquisitions.
Reliable and widespread network of suppliers
Weaknesses
The business integrations and majority of
acquisitions have been failures in the long run
like Kiddicare.
Recently, there have been gaps in the product
ranges offered by it as it is still reeling from the
pandemic.
Opportunities
The company's newfound focus on the “step
change” and “eat at home” sectors in British
retail.
Emergence of new markets and trade
relationships after Brexit and COVID-19
Threats
Many of it's product offerings currently with
highest profit margins are seasonal.
Rising levels of childhood obesity and
environmental damage can forcefully stop sale
of many products (UK's Morrisons faces
investor heat over unhealthy food, 2022)

In order to gain an understanding about the enterprise's current capabilities, a value chain
analysis has been applied below which is a management model used for bifurcation and
identification of a firm's routine activities into primary and support functions for better
facilitation of strategic planning (Mualla, Puri and Raithatha, 2021).
Primary activities:
Inbound and outbound logistics which includes retail supply chain, distribution systems
and relation with suppliers are key components for success of a supermarket as it has to keep a
ready inventory full of numerous product lines. Morrison's has a robust supply chain network
and delivery network spread all across the UK. Operations is one of the key strength of
Morrison's is that many of it's popular product lines are produced and packaged by them. The
process of value addition is done through procuring the best possible fresh ingredients and
managing a readily available inventory through set quality standards. Sales and marketing
refers to the way products are promoted and advertised to the final consumer makes or breaks a
business in retail industry as it is very competitive. Morrison's current marketing strategy has
worked quite well in strengthening it's brand as it has shifted it's focus towards becoming a
shopping hub for green, healthy and sustainable products (Pilkington, 2021). It has also lowered
prices across all product mix elements to drive sales.
Services apart from just providing products at mass discounts, current service capabilities
of Morrison's goes far beyond traditional retail as it also focuses on online shopping and fresh
food delivery along with dry cleaning and cafe which helps diversify the customer base.
Support activities:
Technology development at Morrison's comes from it's innovative and advanced usage
of technology in it's operations. It has worked hard to develop checkout free stores powered
exclusively using artificial intelligence and cashier-less stores to reduce contact amid the current
pandemic. Procurement means the collection of required raw materials and inputs to undertake
operations has to be streamlined in retail due to requirement of high level inventory
management. Morrison's can procure most of it's needed goods thanks to it's robust supply chain
and it has also made some advanced changes to it's supply network by fully automating it's
ordering system.

Morrison's understands the Human Resource Management needs of a competent
workforce to look after and manage its hundreds of stores as it employs trained and talented
individuals to service the large variety of customers that come to their supermarkets. Company's
infrastructure at Morrison's retail stores are all technologically advanced and come fitted with
all sorts of customer conveniences such as dedicated parking lots and cafes and it is looking
forward to expanding in new territories like Stonehaven. It has also legally accepted to be taken
over by a US company named Clayton, Dubilier and Rice (CD&R) for $9.5 Billion which will be
used majorly towards improvements to it's infrastructure (Morrisons: US firm wins auction to
take over supermarket chain, 2021).
By analysing the above conducted SWOT and value chain analysis of Morrison's current
innovations, market conditions and organizational capabilities, it is evident that most of it's
threats that pose a harm to it's market share and profits can be alleviated by using innovative
methods of product design and marketing tactics (Toussaint, Cabanelas and Blanco‐González,
2021). The firm has been successful in remaining profitable and highly operational even during
the pandemic thanks to it's robust organizational capabilities. The use of innovative tools by the
company is reflected in the way it operates it's newly automated supply chain and empowers it's
various stores in the country with advanced robotics and artificial intelligence based systems.
The overall current capability and innovative performance of the company is quite strong for it's
market position.
Illustration 4: Morrison's turning around with 3% sales
growth

Morrison's comparison with its retail sector rivals
As established earlier, the main competition of Morrison's comes from the other major
supermarket chains such as Tesco and Sainsbury's along with major discounters such as ALDI
which are all giving tough competition to the company. In the light of the chaos and economic
devastation causes by the coronavirus, supermarkets in UK have changed their mission to
provide quality goods as cheaply as possible.
According to the above statistics data which was collected to determine which
supermarket was cheapest, it can be clearly seen that Morrison's is currently struggling to
maintain its competitive edge (Supermarket price comparison, 2022). Its major rivals such as
Tesco and Sainsbury's are all cheaper by a small margin but discounters such as ASDA and
ALDI are much more affordable which is a threat which needs further addressing by the firm.
Illustration 5: Price comparison between different UK supermarket chains

The industry in 2021
The retail industry is one of the most successful and tightly regulated sectors of the UK's
economy. It forms a large share of it's GDP which is why there is a stark existence of tough
competition between major players in this market segment. In order to develop sustainable and
consistent competitive edge in retail, one has to analyse and understand the current trends and
future forecasts in retail. Some of the major recent happenings and futuristic developments in
relation to UK's retail landscape are stated herein.
Indoor Positioning Systems (IPS) – These highly advanced systems have been seeing
an increased use in major stores and supermarkets across the UK and they use infrared signals to
detect activity inside a facility. Retailers have been using it to guide customers to their desired
shopping sections so they do not get lost and shopping is done in quick sessions (Zhongming,
and et.al., 2019). This technology has also been used in grocery stores to provide customized and
targeted deals to customers operating in certain departments of the supermarket such as meats,
vegetables and fresh food discounts. It is also beneficial in maintaining a digital record of the
amount of customers visiting a particular store and the items they are buying (7 Retail
Technology Trends Reviving the Stores in 2022, 2022).
Augmented Reality – AR has been a driving force behind success of modern businesses
and the retail industry is no different as it is in current use in a variety of futuristic operations.
This technology has been combined with the above mentioned Indoor Positioning Systems to
guide customers by showing directions and store layout on their mobile screens. Retail stores
like Target have been using augmented reality to provide virtual changing rooms where
customers can test the look of their purchases before finalizing their buying decision and this
trend has been helpful in helping personnel working in supermarkets in visualizing and stocking
up shelves to achieve efficiency in product line setup.
Cashier-less Stores – The retail industry has taken one of the hardest hits to profitability
and sustainability from the COVID-19 pandemic. Existence of large crowds and no measures to
eliminate contact inside stores have made the concept of removing billing staff from the premises
a growing trend to entice consumers to resume regular shopping again. QR codes, payment
scanning systems and artificial intelligence has been getting increased usage in 2021 and even
robotic integration has been seen in retail chains like Target to automate many human job roles.

Morrison's being one of the major presences in UK's retail and grocery sector has sped up the
technological and innovative advancements in it's operations in 2021 to combat the coronavirus
slowdown and cater to the growing demands of it's target demographic. They have started
experimenting with their stores to make them free of human personnel and touch with the help of
artificial intelligence and robotic solutions and the trial started in their headquarters in Rashford.
Morrison's vast history as innovator's in retail continues to guide them down a profitable path
regardless of political disruptions and stiff competition in retail.
Innovation roadmap for Morrison's
In order to properly compete with the growing futuristic demand of the retail sector,
Morrison's will need a proper workforce and diverse one as well since women participation is
also key in innovation (González-Moreno, Díaz-García and Sáez-Martínez, 2018). A Gantt chart
has been designed below to chart the company's innovation requirements.
Activities Year 1 Year 2 Year 3 Year 4
Innovative and
well trained
workforce
A sharp and
shared
knowledge
information
system
Strong methods
of regulation
Smart
technological
integrations
Cross-Functional cooperation
This method is also very helpful in helping companies like Morrison chart out their future
growth and move towards being much more sustainable and achieve better growth prospects. In

cross-functional cooperation, individuals with different technical expertises work together as a
collective unit to achieve goals (Nguyen, and et.al., 2018). This leads to innovative capacity
development as the teams formed through this method can help Morrison be more agile and this
also helps build a versatile team. Knowledge transfer is also very important for Morrison as the
company has diverse field of operations and having employees which possess domain knowledge
of various fields through cross-functional cooperation can help increase organizational
productivity through facilitation of multitasking (Cortez and Johnston, 2018).
CONCLUSION
The above concluded report discussed the role and impact of innovation on UK's retail
industry using the organizational context of market leading supermarket chains in the country. It
was used to conduct an innovation audit detailing the rich and long spanning history of
innovation of supermarkets since it's inception in 1899 till the current days and their current
capabilities and performance were evaluated using SWOT and value chain analysis respectively.
The report was concluded with a brief outlook on the current trends and technologies in use
inside the retail industry and the way major retailers are adopting to these latest trends was also
described in brief.

REFERENCES
Books and Journals

Água, P.B. and Correia, A., 2020. Innovation governance in practice: A business policy
approach. Corporate Board: Role, Duties and Composition, 16(2), pp.54-64.
Bhattacharyya, S.S., 2020. Integrated perspective for entrepreneurs: The dos and don’ts in
strategic management of new business ventures. Journal of Operations and Strategic
Planning, 3(2), pp.159-193.
Bhunnoo, R. and Poppy, G.M., 2020. A national approach for transformation of the UK food
system. Nature Food, 1(1), pp.6-8.
Cortez, R.M. and Johnston, W.J., 2018. Cultivating organizational wisdom for value innovation.
Journal of Business & Industrial Marketing.
Games, D., 2019. Can SME benefit from innovation in an emerging market economy?. Academy
of Entrepreneurship Journal, 25(1), pp.1-10.
González-Moreno, Á., Díaz-García, C. and Sáez-Martínez, F.J., 2018. R&D team composition
and product innovation: Gender diversity makes a difference. European Journal of
International Management, 12(4), pp.423-446.
Huang, Y.T., 2020. Internal marketing and internal customer: A review, reconceptualization, and
extension. Journal of Relationship Marketing, 19(3), pp.165-181.
Meelen, T., Doody, B. and Schwanen, T., 2021. Vehicle-to-Grid in the UK fleet market: An
analysis of upscaling potential in a changing environment. Journal of Cleaner
Production, 290, p.125203.
Monteiro, A.D.S., 2019. Morrisons: equity valuation (Doctoral dissertation).
Mualla, K., Puri, S.V. and Raithatha, K., 2021. Evaluating the Impact of Regulations and
Alliances on the Sixth Generation of Technology and Innovation Management.
International Journal of Digital Information and Wireless Communications, 11(1),
pp.NA-NA.
Nguyen, N.P., and et.al., 2018. Cross-functional knowledge sharing, coordination and firm
performance: The role of cross-functional competition. Industrial Marketing
Management, 71, pp.123-134.
Okumus, F., and et.al., 2019. Introduction to strategic management. In Strategic management for
hospitality and tourism (pp. 3-21). Routledge.
Pantano, E. and Vannucci, V., 2019. Who is innovating? An exploratory research of digital
technologies diffusion in retail industry. Journal of Retailing and Consumer Services,
49, pp.297-304.
Pilkington, M., 2021. Retail Recovery: How Creative Retailers Are Winning in Their Post-
Apocalyptic World. Bloomsbury Publishing.
Toussaint, M., Cabanelas, P. and Blanco‐González, A., 2021. Social sustainability in the food
value chain: An integrative approach beyond corporate social responsibility. Corporate
Social Responsibility and Environmental Management, 28(1), pp.103-115.
Zhongming, and et.al., 2019. UK supermarkets sign government pledge to help halve food
waste.
Online References
Wm. Morrisons Supermarkets PLC - Company Profile, Information, Business Description, 2022
[online] available through <https://www.referenceforbusiness.com/history2/71/Wm-
Morrison-Supermarkets-PLC.html>

UK's Morrisons faces investor heat over unhealthy food, 2022 [online] available through
<https://www.reuters.com/world/uk/uks-morrisons-faces-investor-heat-over-unhealthy-
food-2021-06-09/>
Morrisons: US firm wins auction to take over supermarket chain, 2021 [online] available
through <https://www.bbc.com/news/business-58773825#:~:text=A%20US%20private
%20equity%20group,7bn%20(%249.5bn)%20bid.>
7 Retail Technology Trends Reviving the Stores in 2022, 2022 [online] available through
<https://mobidev.biz/blog/7-technology-trends-to-change-retail-industry>
Supermarket price comparison, 2022 [online] available through
<https://www.which.co.uk/reviews/supermarkets/article/supermarket-price-comparison-
aPpYp9j1MFin>