London: On the scale of corporate missteps, the problems of Wm Morrison look as if they should be solvable.
In a competitive marketplace, with all the rivals showing sharp elbows, a same-stores sales loss of 2.5 per cent is not a disaster.
Encouragingly for investors the immediate profit impact looks likely to be marginal.
The big question that chief executive Dalton Philips and the Morrison management have to answer is why they have been so much slower than the other grocers to climb on the convenience store and online platforms.
It did not require an act of management genius to recognise that those companies that have pioneered these formats are reaping the benefits and those who haven’t are suffering.
With just 12 small stores in its portfolio, Morrison is so far behind its rivals, including Tesco, M&S’s Simply Food and a fast expanding J Sainsbury, as to be almost laughable. The good news is that with the rest of the high street suffering and Tesco at saturation point in large parts of the country, rolling out new smaller formats (Sainsbury’s is managing one or more a week) should be possible with a bit of willpower.
Going digital is more of a problem. Morrison has done its homework in New York but using that platform could take a long time during which it will be eaten alive by more alert rivals.
One has always thought that the short-cut for Morrison to becoming a real digital player would be embracing Ocado — which ought to be possible despite its supply deal with Waitrose, which has been building an alternative model.
That raises new questions as to whether it would have the support of investors for a relatively big deal and whether the Ocado robotic warehousing model stacks up against hand picking as at Sainsbury.
Philips had better make up his mind otherwise Morrison risks becoming the tortoise that never catches up with the hare.
AS chair of the Basel group of banking regulators Sir Mervyn King had little choice but to big up a new deal on bank cash rules describing it as ‘very significant’.
But in his heart-of-hearts one suspects that King, of all people, will have doubts.
More than almost any other central banker the governor of the Bank of England, now on his last lap, has been at the front line of criticism of commercial banks. King has generally favoured splitting casino banks from their retail arms, forcing banks to conserve capital rather than distributing and is thought to have been dismissive of past bank lobbying efforts to water down reform proposals.
It is hard to imagine him supporting a weakening of the timetable for implementing new liquidity rules and the classes of assets to be included without a heavy heart.
In the case of the UK, King was ruthless in forcing haircuts on banks who borrowed from the ‘special liquidity scheme’ and showed no mercy in insisting that the money be paid back on time.
Moreover, he cannot be entirely comfortable with mortgage-based securities, one of the instruments at the heart of the ‘great panic’ of 2007-08, being counted as cash reserves. This is particularly worrying given the failure, so far, of the Continental banking fraternity fully to recognise their loan losses.
The conflict between tightening regulatory standards and getting the banks to lend is ever-present. That is why the Treasury together with the Bank has unleashed £375 billion of quantitative easing and more recently the Funding for Lending scheme in the UK.
Nevertheless, given the experience of the recent past the case for banks maintaining a strong cash cushion on their balance sheets is overwhelming.
The rise in financial shares, in the wake of the Basel decision, is a sure sign that the banks have scored a victory over the enforcers.
Most consumers will be familiar with Phil Bentley, the boss of British Gas and an executive director of owner Centrica, who has had the rotten job of defending the surge in the utility bills for households.
No one personally blames Bentley for this. He is the victim of successive governments that have failed to resolve Britain’s energy policy, green taxes and the volatility of the gas market. He can, however, take the rap for appalling service (as monitored by Money Mail) and an aggressive attitude towards the media (and by implication customers) seemingly arguing that everyone else rather than British Gas is responsible for the pain.
What is most aggravating is that now that he has fallen out with his ultimate line manager Sam Laidlaw, chief executive of Centrica, he could walk away with a potential rewards package worth up to £13 million (Dh76.9 million) including his pension pot.
That level of greed — for someone running a simple utility — will rightly be a red rag to every household up and down the land.
— Daily Mail