Morrisons first supermarket to price-match against the discounters

Morrisons is claiming ‘last mover advantage’ in the loyalty space and instead of launching a traditional points-based scheme is introducing a price-matching programme that will see it become the first supermarket to include the discounters.

Video: Morrison’s new Match & More loyalty scheme

Launching tomorrow in 11 stores, the Match & More scheme will compare the price of customers’ baskets against Asda, Sainsbury’s, Tesco, Aldi and Lidl and offer them points if the shop would have been cheaper elsewhere. Rather than handing out a voucher each time, customers will accrue points until they have a voucher worth £5, which they will then be able to spend.

They will also gain points for buying fuel with Morrisons and when they purchase “featured” brands. Customers can use the card online or in-store and there will be an app that lets users see how many points they have, link their card to their local store and create shopping lists.

“Ultimate guarantee” on price

Speaking at an event to launch the scheme today (2 October), Morrisons chief executive Dalton Philips claims this is the “best and most comprehensive” scheme on the basket, offering customers the “ultimate guarantee” that they aren’t losing out on price if they shop at Morrisons.

The aim, he says, is to “neutralise” on price and differentiate on service, range and fresh food, areas that he claims the discounters can never compete on. It also addresses common customer concerns over price-matching schemes, such as losing paper vouchers or not feeling the full benefits because the vouchers are for small amounts of money and run out within a few weeks of being issued.

Last month, Sainsbury’s changed its Brand Match scheme to only focus on Asda after claiming it is the “value leader”, offering customers a paper coupon valid for 2 weeks if they spend £20 and buy 10 items.

Tesco, meanwhile, prices matches against the other big four and offers a till receipt that is valid for 28 days. Asda’s scheme is only available if shoppers log onto its website and enter a code to print off a coupon.

Boosting basket size

morrisons match and more 2014 460

Morrisons hopes the scheme will help boost the basket size of the more than 12 million people who shop at Morrisons every week. Speaking at the same event, marketing and customer director Nick Collard claims the number of people shopping at Morrisons is actually increasing, but that the amount they spend is declining as people shop around to get the best deal.

He cites figures that show half of consumers are now shopping at 4 supermarkets every month.

Morrisons has not offered a loyalty card until now, although it did have its Morrisons Miles scheme which offered customers points for buying fuel with the supermarket, in part due to limitations with its IT and in-store payment systems. However, it has spend the past few years investing in those to be able to offer this service.

The loyalty scheme is part of wider work Morrisons is doing to address its price gap with the discounters. Earlier this year it dropped the price of thousands of products, launching a marketing campaign to promote the changes and says it will continue to offer competitive every day pricing.

Price perceptions

Speaking to Marketing Week, Collard admits that Morrisons’ price perception still lags, with his role central to “marrying” perceptions with the reality. Morrisons will launch a marketing campaign at the end of October, once the scheme has ruled out to all its stores, that will explain the programme and reinforce its price positioning.

Appearing on TV, in print and outdoors it will feature brand ambassadors Ant and Dec. The loyalty scheme will also form an “important” part of its Christmas marketing.

“Perpetuating the price war”

Mark Evans, UK general manager at loyalty company ICLP, says addressing the tactical need of price matching against competitors is a “sensible strategy in the short term”, however raises concerns that it will perpetuate the price war by highlighting when Morrisons is more expensive. He also questions whether it might be a “threat” to its brand positioning, which has focused on fresh food and “market street” in-store concept.

“Loyalty only succeeds in the longer term when brands create significant value for customers – ideally at a higher perceived value/lower cost. Loyalty should bring the brand promise to life, not work against it. As a core customer proposition it seems the wrong approach to fight the discounters on their home turf rather than stick to their customer experience/product quality differential strategy.

“’Low cost is here to stay and like the airlines, supermarkets need to decide whether to fight that battle or focus on a smaller, and potentially higher margin slice of the piece. The sector disruption has happened now deal with it strategically not tactically,” he adds.

Unlike loyalty schemes from rivals, Morrisons’ programme will not offer customers points for shopping in store. Both Tesco’s Clubcard and Sainsbury’s Nectar lets people accrue points based on the value of their shop.

Asda is still vehemently against traditional points-based loyalty schemes.

Collard says this is just the first stage of plans for the loyalty card, with the supermarket hoping to “discover over time” how it can keep adding value to Match & More. Initally it will focus on “personalising stores and increasing value to customers”.

Next year Morrisons will investigate how it can personalise the offers and deals it provides to customers based on their shopping habits. It will also look to find partners to work with on redeeming points, for example getting customers money off holidays or meals out.

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