Morrisons sales suffer after it pulls back from Black Friday

Morrisons blamed a challenging Christmas trading period as competitors shifted to promotions, but admits the supermarket “missed” the Black Friday halo effect after pulling back from the discount event.

morrisonsMorrisons has admitted it “missed” the impact of Black Friday after pulling back from the discount event this year in favour of investing in price on core products such as turkey and festive vegetables.

For the past few years, Morrisons has run a ‘Black Fivedays’ promotion that offered money off larger pack sizes of various key grocery lines that customers often stock up on ahead of Christmas. But this year it scrapped the deals in favour of a promotional package that offered “important offers for consumers in the final few days” before Christmas, such as lower prices on turkey and three British vegetables for £1.

However, speaking on a press call this morning (7 January), CEO David Potts said Morrisons had “missed” the halo effect of running a Black Friday promotion and would reconsider that decision next year.

“In previous years, we have used Black Friday as a springboard into Christmas but we held back from that this year,” he explained.

“That’s one of the things we’ll reflect on. We missed it more than we replaced it.”

Morrisons also admitted there had been a big impact from promotions on products such as alcohol and fuel as trading conditions “remained challenging”. The supermarket saw like-for-like sales excluding fuel fall 1.7% year on year in the 22 weeks to the 5 January, while total sales fell 1.8% (and 2.9% including fuel).

Morrisons is the first of the ‘big four’ grocers to report its Christmas performance, but so far signs are it was a difficult festive period as consumers reined in spending. Figures from Kantar show the overall grocery market grew by just 0.2% in total last year, the slowest growth rate since 2015.

None of the big four saw growth, with Morrisons faring worst according to Kantar as sales slid by 2.9%. This was followed by Asda with a 2.2% decline, Tesco on 1.5% and Sainsbury’s with a fall of 0.7%.

Kantar’s head of retail and consumer insight, Fraser McKevitt, explains: “There was no sign of the post-election rush many had hoped for in the final weeks before Christmas, with shoppers carefully watching their budgets. In fact, many of us cut back on traditional and indulgent festive classics.”

However, both Aldi and Lidl performed better as consumers continue to focus on price. Aldi says its total sales were up 7.9% for the four weeks to Christmas Eve, although this is slower than in the previous two years and includes the impact of new store openings.

Kantar’s figures show Aldi’s sales growing 5.9% and Lidl’s up by 10.3% – the best performance of any grocer. The Co-op’s sales were up 3%, while Iceland’s sales climbed 1.3% and Waitrose experienced a 0.9% decline.

After a difficult Christmas, Potts said that while there was a “slight valve release” post-election this was yet to show up in its numbers. He does not expect consumer confidence, and therefore spending, to rebound until Brexit is fully resolved.