Using a SWOT analysis, critically examine the internal and external environment of Morrisons, a supermarket chain in the UK, as described in the case study. Finish your analysis by providing recommendations to Morrisons about the important issues it needs to address and the actions it needs to take for business success. Article 1 Morrisons sparkles with 8.5% rise in sales over festive period Champagne and salmon lead the way as expectations rise for UK supermarket sales. Strong demand for luxury Christmas favourites helped to drive an 8.5% rise in sales at Morrisons over the festive period, as the chain kicked off reporting on what is expected to be a bumper trading period for supermarkets. Morrisons said online sales had tripled and growth was boosted by strong demand for festive favourites such as champagne and salmon as families made the most of the quieter festivities during the pandemic. Sales in Morrisons's established stores rose 7.3% in the nine weeks to 3 January but that was boosted by a 1.2% rise in wholesale sales via the retailer's deal with Amazon and to supply convenience stores. The group delivered 35,000 of its new food boxes, which can be ordered by phone, in the two weeks before Christmas. The supermarket was the only one of the UK's four largest chains to gain market share over Christmas, according to analysts at Kantar, as it cut prices and increased home deliveries. Morrisons said customer shopping patterns were different this year, as Covid restrictions prevented larger gatherings of friends and family. Champagne sales were up 64% compared with last year, while sales of whole salmon rose 40%. David Potts, the chief executive, said: "Customers were determined to have a good Christmas even if it was quieter than usual." He said the company had "put its assets at the disposal of the country" and this would include three Morrison stores hosting vaccination centres in their carparks from Monday. Potts said he had offered up another 37 sites for use if required. The chain said that despite the "extremely unpredictable current circumstances" it still expected profit for the current year to be in line with expectations. Morrisons's profits are likely to be less than half the 420m to 440m once hoped for after it agreed to pay back 230m of the government's business rates relief. The company said Covid-19 safety measures, including the cost of covering for vulnerable staff who must now shield at home, would also now rise by 10m to 280m under the latest lockdown rules. Nearly 7% of staff are currently off work, more than double the typical number for the time of year, because of the impact of test and trace, and the need to self-isolate or shield at home. Closing in-store cafes and lower fuel sales resulting from the government's "stay at home" decree will hit profits by another 10m. However, the Covid-related hits to profit are largely expected to be offset by the benefit of higher sales as supermarkets pick up business resulting from the closure of restaurants, pubs and cafes. The chain has also spent 65m on preparing for the end of Brexit transition this month, including building up stocks of some items to prevent any shortages. Potts said about 81 product lines, including 22 types of red wine, canned fruit and pasta, were held up in Europe as some hauliers were refusing to travel to the UK because of concerns about the new variant of the Covid-19 virus and additional paperwork resulting from the end of Brexit transition. But Potts said he was "absolutely not" concerned and expected the goods to be delivered soon. "I don't think there will be a shortage of red wine," he said, pointing out that Morrisons sold more than 100 types of red wine. "We are ready for all circumstances," he said. He said it was too early to tell if there would be hold-ups at Channel ports after new rules on trading with the European Union came into force this month, as currently the volume of shipments was very low. Potts said his main effort to offset issues caused by Brexit would be in considering sourcing more products from the UK. Morrisons sources two-thirds of its goods in the UK and Potts wants to increase that further. "I'm going to be looking for British entrepreneurs starting a company despite the [difficult] time," he said. (Source: Butler, 2021) Article 2 Morrisons can have its online cake and eat it Price cuts and champagne give supermarket chain cause to celebrate. Morrisons can chart its recent history in panettones. The festive Italian bread was a centrepiece in its ill-fated move upmarket, with chief executive Dalton Philips boasting in 2010 that in-store bakeries were able to turn them out at half the price of imported brands. The panettone outlasted him. Annual sales had doubled to more than 400,000 by 2016, a year after poor Christmas trading served as concluding evidence that Mr Philips had moved the Bradford-based supermarket chain too far from its parsimonious roots. Though peak panettone now looks to have passed ("we sold a total of 271,072 for the full Christmas period," a patient spokeswoman tells Lombard), it has still merited a mention in both the 2020 and 2021 festive season investor calls. CEO David Potts' continued enthusiasm might reflect that Morrisons's own-brand panettone now sells for 7, versus 2 when he took over from Mr Philips five years ago. All this cake talk is not totally irrelevant to the investment case. The company's latest update shows how Mr Potts has delivered many of the promises made by his predecessor, who could never square how to sell special occasion luxuries while keeping average prices low enough to compete with the German discounters Aldi and Lidl. Talk of booming demand for champagne and smoked salmon in Morrisons's statement is undercut by continuing price cuts on staples, which according to Goldman Sachs have lowered the typical basket cost to within 4 per cent of Aldi. Online has been the growth engine, with Morrisons managing to exploit its last-mover status among the Big Four grocers. Having last year loosened exclusivity restrictions on an ecommerce partnership signed with Ocado in 2014, Morrisons was able to meet lockdown demand by introducing in-store picking and expanding partnerships with Amazon and the 2020 and 2021 festive season investor calls. CEO David Potts' continued enthusiasm might reflect that Morrisons's own-brand panettone now sells for 7, versus 2 when he took over from Mr Philips five years ago. All this cake talk is not totally irrelevant to the investment case. The company's latest update shows how Mr Potts has delivered many of the promises made by his predecessor, who could never square how to sell special occasion luxuries while keeping average prices low enough to compete with the German discounters Aldi and Lidl. Talk of booming demand for champagne and smoked salmon in Morrisons's statement is undercut by continuing price cuts on staples, which according to Goldman Sachs have lowered the typical basket cost to within 4 per cent of Aldi. Online has been the growth engine, with Morrisons managing to exploit its last-mover status among the Big Four grocers. Having last year loosened exclusivity restrictions on an ecommerce partnership signed with Ocado in 2014, Morrisons was able to meet lockdown demand by introducing in-store picking and expanding partnerships with Amazon and Deliveroo. Kantar data published on Tuesday showed that nearly 13 per cent of UK grocery sales in December were online, up from 7.8 per cent a year ago, with Morrisons the clear sector winner on sales growth of 190 per cent. Rapid capacity expansion has been costly but Morrisons says online is already profitable. Just as important is the broadening of the customer base. Unlike its main rivals, Morrisons has a smaller share of the online market than of in- store sales. Every new sign-up is therefore less likely to be at the expense of a supermarket visitor. Shopping habits formed during the pandemic are likely to stick. And while the cost of maintaining store estates to serve fewer customers will drag on supermarket profit margins in the coming years, Morrisons's growing overall market share means it should suffer less than Tesco and J Sainsbury. Though picking post-lockdown sector winners won't be a piece of cake, Morrisons looks to have the right ingredients