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Morrisons to launch more price cuts in first salvo of ‘tough’ Christmas contest Morrisons to launch more price cuts in first salvo of ‘tough’ Christmas contest
(35 minutes later)
Morrisons will launch more price cuts and promotions before Christmas, chief executive Dalton Philips promised, as part of the embattled supermarket chain’s fightback against the discounters.Morrisons will launch more price cuts and promotions before Christmas, chief executive Dalton Philips promised, as part of the embattled supermarket chain’s fightback against the discounters.
The planned price cuts come after Morrisons last week revealed a loyalty scheme through which it will return cash to shoppers if they could have got a better deal at Aldi and Lidl or major rivals Tesco, Asda and Sainsbury’s. It is the first time a major grocer has promised to price match against the discounters. The planned price cuts come after Morrisons last week revealed a loyalty scheme through which it will return cash to shoppers if they could have got a better deal at Aldi and Lidl or big rivals Tesco, Asda and Sainsbury’s. It is the first time a major grocer has promised to price match against the discounters.
Philips admits the scheme will be costly and analysts say it is too complex – involving points and payback rather than just cheaper shelf prices – to be a real winner with shoppers. But Dalton insisted the price-matching scheme can be a “gamechanger” in reassuring shoppers they do not have to go elsewhere. And Philips said Morrisons still has capacity to cut prices further ahead of what he said will be a “tough” Christmas for the supermarkets. Philips admitted the scheme will be costly and analysts say it is too complex – involving points and payback rather than just cheaper shelf prices – to be a real winner with shoppers. But Philips insisted the price-matching scheme can be a “gamechanger” in reassuring shoppers they do not have to go elsewhere. Philips added Morrisons still has capacity to cut prices further ahead of what he said will be a “tough” Christmas for the supermarkets.
“We’ve got a relentless focus on making sure our customers don’t need to shop anywhere else and taking big bold decisions.” “We’ve got a relentless focus on making sure our customers don’t need to shop anywhere else and on taking big, bold decisions.”
He added: “We are taking prices down. We have already reduced prices on a couple of thousand items. We raised prices on about 300 lines but our competitors raised prices on about 2,000. We are continuing to reduce the cost of a shopping basket.”He added: “We are taking prices down. We have already reduced prices on a couple of thousand items. We raised prices on about 300 lines but our competitors raised prices on about 2,000. We are continuing to reduce the cost of a shopping basket.”
Big promotions will also be rolled out alongside the new loyalty scheme, although Philips would not confirm whether Morrisons would repeat its usual Christmas voucher promotions.Big promotions will also be rolled out alongside the new loyalty scheme, although Philips would not confirm whether Morrisons would repeat its usual Christmas voucher promotions.
While consumer confidence is rising, unemployment is falling and saving rates and house prices are going up, Philips said that supermarkets were not enjoying the benefits of economic green shoots because shopper’s spending power remains under pressure. “After years of austerity, it is going to be difficult in the food market. If customers have got a bit extra cash I can see them spending it on non-food. After so many years not being able to upgrade their sofa or TV, any extra pennies will go there,” he said. While consumer confidence is rising, unemployment is falling and saving rates and house prices are going up, Philips said that supermarkets were not enjoying the benefits of economic green shoots because shopper’s spending power remains under pressure.
“After years of austerity, it is going to be difficult in the food market. If customers have got a bit extra cash I can see them spending it on non-food. After so many years not being able to upgrade their sofa or TV, any extra pennies will go there.”
The big supermarkets are facing the toughest period in decades. Shoppers have reined in the number of items they buy at a time when the cost of major food commodities is also falling and a change in shopping habits is battering out-of-town supermarkets.The big supermarkets are facing the toughest period in decades. Shoppers have reined in the number of items they buy at a time when the cost of major food commodities is also falling and a change in shopping habits is battering out-of-town supermarkets.
In March, Philips already announced plans to halve profits to shave £1bn off costs in order to cut prices. Market analysts Kantar Worldpanel said there had been an improvement in sales in August and September.In March, Philips already announced plans to halve profits to shave £1bn off costs in order to cut prices. Market analysts Kantar Worldpanel said there had been an improvement in sales in August and September.
“We definitely have seen a turn. We’ve seen a very positive summer. If you look at the Kantar figures over the summer we are firmly back in the pack and, depending how you cut the numbers, in many cases we are right at the top of the pack,” Philips said.“We definitely have seen a turn. We’ve seen a very positive summer. If you look at the Kantar figures over the summer we are firmly back in the pack and, depending how you cut the numbers, in many cases we are right at the top of the pack,” Philips said.
However, he admitted that traditional retailers are is still under attack and losing sales to the discounters. “I’ve been saying this for a long time and we put a deliberate plan in place, we halved our profits. There are big structural changes going on. We have recognised it and are dealing with it, but we are on a journey that is going to take time because when you lower prices youalso lower top line sales.” However, he admitted that traditional retailers are is still under attack and losing sales to the discounters. “I’ve been saying this for a long time and we put a deliberate plan in place, we halved our profits. There are big structural changes going on. We have recognised it and are dealing with it, but we are on a journey that is going to take time because when you lower prices you also lower top-line sales.”
With Morrisons shares at an 11-year low, the company could be viewed as vulnerable. Earlier this year members of the Morrison family were rumoured to be trying to enlist private equity backers for a takeover.With Morrisons shares at an 11-year low, the company could be viewed as vulnerable. Earlier this year members of the Morrison family were rumoured to be trying to enlist private equity backers for a takeover.
Philips said that Morrisons is clearly different from its rivals in that it owns its own food processors – like fruit packers, farms and abbatoirs. “We have got a very strong balance sheet. We own all our stores at a time you wouldn’t want to be paying leases for 25 years. We have a fully funded pension scheme and have significant opportunity to take further costs out. We recognised as a board the trends and adapted and have been bold. We are very confident we have a place in UK retail,” Philips said. Philips said that Morrisons is clearly different from its rivals in that it owns its own food processors – such as fruit packers, farms and abattoirs. “We have got a very strong balance sheet. We own all our stores at a time you wouldn’t want to be paying leases for 25 years. We have a fully funded pension scheme and have significant opportunity to take further costs out. We recognised as a board the trends and adapted and have been bold. We are very confident we have a place in UK retail,” Philips said.