Morrisons’ new loyalty scheme validates the discounters

Morrisons made a splash this morning (2 October) with the launch of its loyalty card by including the discounters Aldi and Lidl in a price-matching scheme for the first time. Far from being a reason for people to shop with Morrisons, it could drive them to the discounters.

Morrisons’ Match & More scheme means that if customers’ basket would have been cheaper anywhere else, they get points – 10 for every 1p difference. Get 5,000 points and they’ll be issued with a £5 voucher to spend in store.

Adding the discounters is a big leap forward for price-matching schemes, which have so far seen the big four focus their comparisons on each other. It also gets rid of a number of things that shoppers find annoying about the current services.

At Morrisons people won’t have to fiddle around with pieces of paper, saving them for their next shop so they can get 23p off. All that information is stored on the loyalty card, with points building up until customers have enough to make a voucher worth handing out.

Morrisons hopes the scheme will convince people that they don’t need to shop around to get the best price. That instead of buying some items at Morrisons at some at Lidl or Aldi they can do their full shop with Morrisons, just like they used to.

It is doubtful the discounters see it like this. Aldi and Lidl’s marketing bosses are probably gleefully watching this latest attempt by one of the big four to convince shoppers that they don’t need to visit the discounters.

All this scheme does is play into Aldi and Lidl’s hands. Aldi released its profits for 2013 earlier this week and claimed that price cuts by the big four supermarkets, rather than stunting its growth, have boosted it.

Sales so far this year have been stronger than in 2013. This despite big investments in price and high-profile marketing campaigns by Tesco, Sainsbury’s, Asda and Morrisons to get across their new lower prices.

As Aldi’s group managing director Matthew Barnes puts it, all the supermarkets have done is encourage customers to “think more about price”.

Those customers that weren’t thinking about Aldi and Lidl before certainly will be now. Morrisons, by price matching with the discounters, has validated their businesses and called them out to consumers in the clearest way possible as the value leaders.

Today (2 October) Sainsbury’s also changed its Brand Match to focus only on Asda because the supermarket said it led the way on pricing among the big four.

Was Asda annoyed? No. So much so it took out full-page ads in newspapers including The Metro this morning thanking Sainsbury’s.

No doubt Aldi and Lidl are thinking the same thing.

Morrisons’ scheme runs the risk of introducing more people to just how cheap their shop could be if they just went to Aldi and Lidl. Rather than encourage them to spend more at Morrisons it could do the exact opposite.

At the discounters customers don’t have to sign up to loyalty schemes, buy comparable products and build up points to save money. They just have to shop there, safe in the knowledge that they offer the lowest prices.

By reducing its offering to a price comparison Morrisons could well push customers into Lidl and Aldi’s open arms.

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