Video: Morrisons ‘I’m Cheaper’ ad for scones
That was an increase on the 5.6 per cent fall Morrisons saw over Christmas and the 2.8 per cent drop last year. Total sales, excluding fuel, for the 13 weeks to 4 May were down by 4.2 per cent.
Last week, Morrisons said it would cut the price of 1,200 products by an average of 17 per cent as part of its £300m investment this year in becoming “more price competitive”. It was backed by a marketing campaign introducing the “new cheaper Morrisons” that highlighted the drop in price for products including scones and sausages.
Speaking on a call this morning (8 May) chief executive Dalton Philips, said the aim is to come closer to the discount grocers Aldi and Lidl, as well as Asda, on price, and then draw customers in with its points of difference, including a focus on range, fresh food and service.
He added: “The reaction of our customers to the 1,200 ‘I’m Cheaper’ price cuts we announced last week has been very positive. Although it will take time for their full impact to be felt, we are confident that these meaningful and permanent reductions in our prices will enable our clear points of difference to resonate strongly with consumers.”
Philips said there is more pricing activity to come from Morrisons this year as it focuses on moving away from promotions and towards every day low pricing. That includes the launch of its loyalty programme later this year.
Figures from YouGov’s Brand Index suggest Morrisons’ focus on pricing is starting to pay off. Over the past month its value score has increased to 21 and it sits behind just Aldi, Lidl and Asda in a table of 25 retailers.
Morrisons said it opened two new supermarkets and 11 convenience stores. It is also set to expand its online grocery service to London on Monday (12 May) and is on target to generate £500m in annualised sales from convenience and online by the end of the year “from a standing start”.
However, analysts say Morrisons needs to focus on its core supermarket business rather than “tinkering around the edges” with e-commerce and convenience.
David Gray, analyst at Planet Retail, says “At present, Morrisons is stuck between a rock (the discounters) and a hard place (M&S Food/Waitrose), not to mention additional threats from Tesco and its UK improvement programme. It is a very uncomfortable position to occupy, one from which turnaround will be all the more difficult.”