Morrisons hopes to be ‘beacon of trust’ for customers following slowdown in Christmas sales

Despite marginally beating analysts’ expectations for the Christmas period, Morrisons will continue to cut prices in 2019 to make sure it can “be there for customers” this year by offering “even greater value for money”.

Morrisons is aiming to be a “beacon of trust” for customers during what will be a politically and economically challenging year for the UK, which today saw the supermarket marginally beat market expectations of near-flat growth for the Christmas period.

In the nine week run-up to 6 January, group like-for-like sales (excluding fuel) increased by 3.6%; of that, 3% of the growth came from wholesale and 0.6% from retail. The results mark the fourth consecutive Christmas of like-for-like sales growth, albeit at a slightly weaker pace compared with Q3 (when retail sales growth was 1.3%) and Christmas 2017 (when it was 2.1%).

While shoppers were notably “more cautious and careful” with their spending, chief executive David Potts says the decision to keep the price of key Christmas items the same as last year “definitely resonated”. He describes it as an “important move” during a period that saw the supermarket sector post record sales of £29.3bn despite growing at its slowest rate since March 2017, according to Kantar Worldpanel figures.

“Trading is always tough, it’s the nature of the industry and as part of the recovery it’s important we do our best work,” Potts said during a press call this morning (8 January).

“Looking ahead it feels like a year to be there for customers, to be a beacon of trust for customers locally. Morrisons is well placed to do that. If it’s a year [when] customers are more savvy it’s more important companies look to fall on the side of their customers and we are certainly looking to do that.”

READ MORE: Next benefits from late Christmas shopping but warns on profits

This week, Morrisons kickstarted 2019’s supermarket price war by slashing the cost of more than 900 “store-cupboard favourites” by an average of 20%. Tesco has since followed suit, cutting the price of hundreds of items as part of its 100th birthday celebrations (Tesco opened its first market stall in 1919).

Potts said this strategy will continue over the coming year to make sure Morrisons is “more competitive” and defends its market share, which Kantar Worldpanel’s figures reveal is down 0.2 percentage points year on year to 10.6%.

The focus on price comes as the German discounters Aldi and Lidl continue to attract new customers. According to Kantar Worldpanel, two-thirds of Christmas shoppers visited Aldi and Lidl over the festive period, culminating in their highest ever combined Christmas market share of 12.8%.

“The idea mainly is to follow customers, don’t get too far behind or too far ahead, as they change we change,” Potts said. “If they’re feeling the pinch a bit more for whatever reasons we have to be there for them to offer even greater value for money. We did that on the run into Christmas and we were rewarded.”

Morrisons is the first of the major grocers to reveal its Christmas sales figures. Sainsbury’s is set to reveal its performance tomorrow, followed by Tesco, Waitrose and Marks & Spencer on Thursday.

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