Wholesale wholly welcome in Morrisons’ new makeover

Comment Martin Flanagan

That’s a neat trick. Supermarket leader Tesco has splashed billions of pounds on taking control of Booker to galvanise its wholesaling arm. Morrisons, smaller but still a member of the industry’s big four, has done a similar trick but via a string of smaller deals that have not eaten up much capital. To use a cricketing metaphor, it is winning it in singles.

In the wholesale space, Morrisons now has the likes of Amazon, Mccoll’s, Rontec and Sandpiper. The division is expected to have £700 million of sales by end-2018, and it will largely be only a matter of time before that figure passes the £1 billion milestone, the company believes.

Morrisons’ chief executive David Potts says the wholesale business can become a second engine of growth for the food retailer in a competitive food retailing environment.

He reckons, with some credibility, that Morrisons being a food maker (it has its own farms), food retailer and wholesaler creates a virtuous circle. Potts deserves praise for the sterling job he has done in turning around a drifting supermarket group over the past three years – with the award of a special dividend for 2017 emblematic of the progress. realistic profit margins just in time. So, instead of Carillion’s irredeemably tarnished template at its former rival we have profits, dividends, prospects and people in work. From Quinn’s comments alongside its 2017 results yesterday, it is clear Whitehall also needs to address the elephant on the motorway.

In the age of austerity, the UK government has wanted to keep contracts for infrastructure work at cheese-paring levels to save scarce taxpayer money.

But that has pushed profit margins to unsustainably low levels, hanging infrastructure groups out to dry when there are delays or cost overruns. Realism is need on both sides.