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In the corner of Terry Hartwell鈥檚 office in Morrisons鈥� Bradford headquarters is a map of the UK, full of pins. The group director of property for the supermarket giant is using the map to explain his firm鈥檚 plans to expand in the south of England.

鈥淚f you draw a line from The Wash across Britain, below that you鈥檒l see we鈥檙e under-represented.鈥� He slices England in two with his hand, a forest of pins representing superstores above the line and only a sparse smattering below. 鈥淭here鈥檚 a lot of scope for us to expand in London and the South.鈥�

Filling in the gaps on this map is a priority. But the map doesn鈥檛 quite explain the 鈥渟taggering鈥� extent of Morrisons鈥� development strategy this year, Hartwell says. For one thing, it doesn鈥檛 show any convenience stores - a big part of its plans. And in May, the company announced a 拢216m tie-up with Ocado, marking a big push into online retailing, which, Hartwell says, will 鈥渃ertainly mean investment in bricks and mortar infrastructure鈥�.

These new ventures have helped make 2013 Morrisons鈥� busiest ever year in terms of developments, with 拢600m of projects and 1 million ft2 of gross retail space set to be delivered by the end of the year. Hartwell expects this figure to rein in slightly from 2014, to a still -hefty 拢500m, with the Morrisons estate set to grow at 3-4% per year, faster than the company鈥檚 long-term average, according to Hartwell.

The good news is that Morrisons鈥� construction supply chain is open to new entrants and it needs fresh expertise to help it deliver its ambitious, multi-channel expansion plans. Southerner Hartwell explains what opportunities are available for would-be suppliers and what to do and not do in order to win the work.

A supply chain is about value, innovation and doing it with a smile on your face

In the pipeline

Morrisons projects come in four main types: large supermarkets; convenience stores; refurbishing existing stores; and supply infrastructure - including infrastructure to support the retailer鈥檚 online retailing push.

The main growth areas are convenience stores and, in the near future, infrastructure to support online retailing. Morrisons has some catching up to do, with Tesco and Sainsbury鈥檚 in particular being long-established in both formats. 鈥淲e鈥檙e kind of late to the party,鈥� Hartwell admits. Morrisons is launching 100 convenience stores this year, branded M Local, following a successful two-year, 12-store trial. The push into new formats is essential, Hartwell says, as 鈥渢hat鈥檚 where the growth is鈥�. He points out that last year more than half of growth in supermarket retailing came from convenience stores and online retailing.

After delivering 100 convenience stores this year, Morrisons aims to open 300 in total by 2015. 鈥淚 can鈥檛 see us stopping there,鈥� Hartwell says. 鈥淲e鈥檒l be delivering 100 a year for the foreseeable future.鈥� Hartwell says the move is a response to changes in consumer behaviour as 鈥減eople are shopping more frequently, rather than doing one big weekly shop鈥�. The push should help Morrisons break into the convenience store-heavy London market, where it currently only has 6% market share.

An M Local opened on New Oxford Street last month, while two more are opening in the capital in the coming weeks.It鈥檚 an 鈥渁bsolutely frantic鈥� time at the moment, Hartwell says. Morrisons is
opening five convenience stores the week we meet and seven the week after. Is he getting panicked phone calls? 鈥淚t wouldn鈥檛 be me getting them,鈥� he laughs. But he鈥檚 confident the roll-out will go smoothly, adding Morrisons has 鈥渄one its homework over the past two years.鈥�

He says that the firm is focusing on neighbourhood and high-street stores, rather than transport hubs or petrol stations, although it is 鈥減laying with the idea鈥� of a push into petrol station shops. However, most of this work is likely to be fit-out work - 62 of the 100 sites this year are re-fits of former Blockbusters, HMVs and Jessops - meaning it is less lucrative for the big main contractors.

We鈥檝e got a big hairy audacious goal of a 30% reduction in our carbon footprint by 2020

Another potentially substantial pipeline of work is building the infrastructure needed to support Morrisons鈥� push into online retailing after its tie-up with Ocado. Hartwell says it is 鈥渆arly days鈥� to determine what construction work will be needed, but he expects Morrisons to adopt a 鈥渉ub and spokes鈥� system, whereby the firm will construct small distribution centres - spokes - across the country to service local areas. Lorries from large distribution centres - hubs - will make deliveries to the spokes and small Morrisons vans will do 鈥渓ast mile delivery鈥�.

However, while Morrisons is prioritising its push into new formats, it hasn鈥檛 turned its back on large supermarkets. The retailer is opening 18 large format stores this year and Hartwell expects it to open a 鈥渟table鈥� 15 sites a year 鈥渇or the next few years鈥�. These superstores will mostly be built in the south of England; three are opening in London this year.

Within this pipeline of superstores is the work of Morrisons鈥� in-house development company ODL. ODL acquires sites for mixed-use schemes anchored by Morrisons stores and has 拢100m of sites and schemes in the pipeline, which Hartwell sees 鈥渟taying at that level鈥�. Hartwell draws a distinction between Morrisons鈥� development plans and those of rival Tesco, which he says 鈥済ot its finger burnt鈥� by investing in more complex, long-term regeneration schemes, which partly contributed to its 拢804m property writedown earlier this year. 鈥淲e鈥檒l invest in sites that take three-to-four years rather than 10-15 year commitments,鈥� Hartwell says.

The supermarket also has a rolling refurbishment programme and has spent 拢150m this year on upgrades and refitting 100 tired superstores. Key to both the new build and refurbishment programmes is sustainability. 鈥淲e鈥檝e got a big, hairy, audacious goal of a 30% reduction in our carbon footprint by 2020 [compared with 2005]. That鈥檚 absolute, so however much our estate grows we are still looking to take 30% out, effectively absorbing our new space.鈥� Morrisons has achieved a 22% carbon reduction so far, despite a 17% expansion of its estate since 2005. The main tactic is changing lighting, by installing LED lighting and natural roof lighting in all new stores, and retrofitting these systems in existing stores. Also part of the mix are rainwater recycling, heat reclaim, PV panels and refrigeration cases.

Getting involved

Morrisons typically procures work through frameworks and has contractor and consultant frameworks for superstores, convenience stores and retrofit work. Some work is procured by negotiation, primarily supply infrastructure.

The frameworks are reviewed annually on a sequential basis. For example, the contractor frameworks for new build and convenience stores - which have six and four incumbents respectively - are up for review in the second half of this year. Morrisons declined to disclose who the current incumbents are, but according to contracts database Barbour ABI, the retailer has worked extensively in the last three years with ISG, Bowmer & Kirkland, McLaren and Kier.

鈥淛ust because we鈥檝e got a framework doesn鈥檛 mean to say we鈥檙e not open to working with new people鈥� Hartwell says. 鈥淐ontractors come and they go and there鈥檚 always movement.鈥� He adds that Morrisons has freshened up its construction supplier list, particularly in the past year, to help it with its convenience store push. 鈥淭here are other ways of impressing us,鈥� he says. 鈥淩ather than just coming in and doing a pitch and saying, 鈥業 want to be on your framework鈥�, why not bring us a site.鈥� He says a contractor recently did just that and it鈥檚 been retained for the build.

When asked if there鈥檚 anything a would-be supplier should avoid when pitching for work, he laughs and says: 鈥淒on鈥檛 work for our competitors!鈥� He鈥檚 only half-joking. He claims some competitor supermarkets go so far as to bar construction suppliers from working for rivals for fear they鈥檒l share commercial secrets, particularly for quantity surveyors that have greater access to 鈥渋ntellectual property鈥�. Morrisons takes a less hard-line approach but 鈥渢ries to avoid those conflicts鈥�. However, it has broken its own rule by deliberately targeting contractors that have worked on rivals鈥� convenience stores to help with its own roll-out.

Morrisons is a fast-changing retailer, but some things remain the same. Construction firms are asked to understand 114-year-old Morrisons鈥� traditional principles. 鈥淲e want them to adopt our values,鈥� says Hartwell. 鈥淥ur strapline is 鈥榝riendly people making great food affordable for everyone鈥�. You can apply that to the construction supply chain - it鈥檚 about value, innovation and doing it with a smile on your face. The best advice I can give our construction partners is, have a look at our values and if you empathise with those and can work in the same way you鈥檙e the right partner for us.鈥�