Video: Morrisons’ new ad for its cheaper sausages
From today (1 May), the price across these 1,200 items will drop by an average of 17 per cent, with the mix including own-brand and branded products. The cuts include a 55 per cent drop in the price of Jammy Dodgers, Napolina chopped tomatoes falling by 37 per cent and own brand crisp six packs down 34 per cent.
The marketing campaign, created by DLKWLowe and which also goes live today, will introduce a new strapline: “It’s the new cheaper Morrisons”. Speaking at an event in London to announce the price cuts yesterday (30 April) chief executive Dalton Philips said customers “shouldn’t fail to see” billboards and TV ads with the new message.
Philips told Marketing Week that Morrisons is trying to get across a “simple message” that the supermarket is now “permanently cheaper”. He said Morrisons is making a significant investment in this campaign, which will run for a number of months.
In total, it has created 31 different TV spots highlighting products including scones, sausages and crisps and is taking over newspaper The Sun’s front cover wrap today (1 May), the first time this has been done by a retailer. There will also be outdoor advertising, as well as in-store communication of the price cuts.
“These ads underline our love of food and making it cheaper. This is about firmly re-establishing our credentials as a value-led grocer with a passion for food in a rapidly changing market,” he said.
The cuts follow Morrisons’ announcement earlier this year that it would invest £1bn in price cuts over the next three years, including £300m this year. It has already lowered the price of some items, such as milk, broccoli and chicken, which Philips claimed had led to a clear uptick in sales, including a 20 per cent increase in sales of minced beef pack, while chicken fillet sales up by a third.
Communicating to cynical shoppers
Philips said it was important to communicate to customers that these are genuine price cuts, not just a temporary deal, with shoppers becoming “cynical” about “confusing promotions and irritated by the volatility of prices”. As part of this strategy, Morrisons will also cut down on its promotions, focusing on fewer and bigger offers and communicating those “in a better way”, including tailored promotions once it launches its “Morrisons Card” loyalty scheme later this year.
“Before, when you went to a department, you might find something like five different teas on offer. That is very hard to understand. We want to be tighter on it. And as we communicate we want to be clear about what is a deal and what is a permanent cut,” he told Marketing Week.
To communicate this Morrisons is launching a website, powered by mysupermarket.co.uk, that will give customers the ability to view the pricing history of an item so they know they are getting a real deal. Philips said this is an important step in building trust with customers by offering transparency over pricing.
Taking on the discounters
Morrisons is just the latest supermarket to announce a range of price cuts as the big four look to counter the growth of discount rivals. Both Aldi and Lidl are experiencing double-digit sales growth, according to Kantar Worldpanel figures, while the market leaders are all suffering declines.
Tesco recently announced that it would be cutting the price of a further 30 products and has been running a “Prices down and staying down” marketing campaign. Asda has also announced a £1bn investment in price cuts and is promoting its promise to be 10 per cent cheaper than its main rivals.
Sainsbury’s has been the quietest of the four, choosing to runs ads highlighting its Nectar loyalty scheme and ‘by Sainsbury’s’ range of products, rather than shouting about price cuts. However, it has lowered the price of a number of items in its store to match rivals, including milk and fresh vegetables.
Philips said the aim of Morrisons’ price cuts was not to beat the discounters on price, but to come close enough to them that shoppers are persuaded to spend more with Morrisons knowing they are getting a better range and service. He said it still has more than 12 million customers a week, but that they are increasingly shopping around to get the best deal, rather than spending their whole food budget in Morrisons as they might have done before.
“More and more customers believed that the price difference – real or perceived – with the discounters had become significant enough to overshadow our positive points of difference,” said Philips.
Philips admitted that Morrisons sales, particularly at Christmas, were disappointing and that the supermarket expects to continue posting like-for-like sales declines. However, he said total sales will continue to grow as it focuses on new channels such as online and convenience.
It now has 110 M Local stores and is opening three new ones today. It is also expanding its online service to include London, with shoppers in West London able to place orders now for when delivery starts on 12 May.
By the end of the year, Morrisons said its new convenience and online businesses will be delivering £500m in annualised sales and are on track for £1bn “from a standing start”.