Morrisons reveals Price War plans

Posted on 2 May, 2014 by Kirsten Kennedy

Last of the Big Four enters the fray

The supermarket sector has become deeply embroiled in a price war, with Asda, Tesco and Sainsbury’s all having revealed intentions to drop prices in the past month in a bid to win back consumers from budget competitors. Now Morrisons has entered the fray, pledging to drop the price by an average of 17 per cent on over 1,000 of its everyday essentials products.

Morrisons-reveals-Price-War-plans

Although its “Big Four” rivals have been increasingly losing market share to brands such as Aldi and Lidl, Morrisons has by far fared the worst from the change in consumer habits which have seen discounters come out on top. Following the release of its disastrous annual results in March, it seems that the retailer has had little choice but to invest in dropping prices, as the alternative would potentially see the collapse of the chain entirely within the decade.

Chief executive Dalton Philips has committed a billion pounds to the scheme over the next three years, marking the brand’s largest ever investment into a scheme of this kind. However, Mr Philips is insistent that the campaign is not simply a means of remaining relevant in an increasingly competitive sector.

He says; “I know this will be easy to characterise as a price war, or a fight back against the discounters.

“But this is not a temporary skirmish or a response to just one channel – it is about firmly re-establishing our credentials as a value-led grocer with a passion for food in a rapidly changing market.”

Morrisons is hoping to combine the lower prices with its already well-publicised commitment to providing consumers with fresh produce, hoping that this will encourage customers to do a full weekly shop in-store rather than simply picking up essentials when required. Part of this method will involve attempting to provide value by reducing waste – a target which it hopes to achieve by cutting unnecessary pack sizes and varieties.

Certain analysts believe that Morrisons’ troubles truly began when it failed to latch on to the growing trend for online shopping as swiftly as its competitors. Although this is now being addressed, the retailer is being forced to play catch up with initiatives such as click and collect and store to door delivery.

However, one online incentive which may put the retailer ahead of the pack is the introduction of a price comparison tool. This will not simply show users how much they can save by shopping at Morrisons – as has been the case with other brands – but will show before and after prices in order to demonstrate the brand’s determination to ease the financial burden upon its customers.

Sadly, Morrisons still has a long way to go before it can begin to catch up with the sales and profits of rivals Tesco, Asda and Sainsbury’s. However, the UK’s fourth biggest supermarket chain has proven that it is fighting back – even if this fight will mean this year’s annual profits will amount to half of initial City expectations.




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