‘Everyone has to eat’ says Morrisons as it anticipates a price-conscious Christmas

As the big four supermarket notches up its eighth consecutive quarter of sales growth, its CEO David Potts says the brand is feeling ‘chipper’ heading into Christmas.

With Christmas fast approaching, the current retail climate suggests consumers will be looking for a bargain.

John Lewis has already predicted the mood around big ticket items will be subdued for quite some time – suggesting Brits will be less likely to trade up this Christmas.

The reality, according to GfK, is Brits are slightly upping their spend on bigger buys such as electricals, but only because they are borrowing more money on credit cards. It has labeled this trend “worrying” and says rising interest rates and inflation will also dampen the mood among many consumers this Christmas.

Despite this negative backdrop, big four supermarket Morrisons will be taking a lot of positive momentum into the crucial Christmas trading period. Today (2 November) it revealed like-for-like sales rose 2.5% in its third quarter.

Although this is a slower rate of growth than the 2.6% and 3.4% growth it recorded in the previous two quarters, it represents the supermarket’s eighth consecutive quarter of sales growth – a reality far removed from the struggling brand inherited by Morrisons’ CEO David Potts when he took the job in February 2015.

And asked by Marketing Week during a press call whether Christmas 2017 will most benefit discount brands, Potts answered: “Our job is to serve core customers as well as we can whatever the prevailing circumstances are. Equally, everyone is welcome at Morrisons and with our ‘Best’ premium range doubling its sales over the last year – the quality message is now there at the business.

“This Christmas we will be holding the prices of 100 of the key festive items – from potatoes to mince pies – so customers will need to decide [if they want to spend more somewhere else] as ultimately everyone has to eat.

“There’s every chance Brits will dial down on eating out and come to Morrisons instead so there’s plenty to look forward to. We’re in better shape this year with more stock in store and more research completed. We feel more chipper going into Christmas.”

Morrisons is trying to tread the line between low prices and high quality

Under Potts, Morrisons has repeatedly talked up its brand positioning as a shop keeper and as a food maker, with it looking to find the middle ground between similar prices to the German discounters Aldi and Lidl as well as high food quality perceptions.

Reflecting on the year, Potts says the brand has most benefitted from word of mouth buzz due to the improvements it has made to its core offer.

He concluded: “The Most important thing we have done with our brand is listen hard to customers and colleagues, and wherever possible respond quickly to their concerns.

“That has led to priorities within the business around competitiveness increase and allowed us to serve customers better. There’s now great value on the shelves and great work completed on our own brand around both notching up quality and notching down pricing combined. All of this combined with cleaner stores has made the shopping trip better than it was and our brand stronger in the market.”

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