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Morrisons cuts prices on 130 grocery staples

Morrisons cuts prices on 130 grocery staples

By Chris Elliott

Morrisons Chief Executive Dalton Philips left the retailer on Monday 16 February, more than a month earlier than was planned. Mr Phillips had been in charge of Morrisons for five years and presided over Morrisons poor festive performance, which saw like-for-like sales fall 3.1 percent.

Poor trading performance, coupled with delays in setting up the Morrisons online sales site, led to Mr Phillips’ departure and prompted Andrew Higginson, the chairman-elect, to insist, “We need to return the business to growth. The board believes this is best done under new leadership.”

There was, however, some slightly more encouraging news for Morrisons as Kantar reported that the retailer’s sales only fell
0.4 percent year-on-year (YOY) – its best performance since December 2013.

On Monday 16 February the grocery retailer also announced that it would be reducing the price of 130 staple grocery items. This follows the price cuts announced by Asda, Sainsbury’s and Tesco earlier in the year.

Morrisons said it would be reducing the price of essentials such as bread, butter, coffee, eggs, fruit juice, milk, sugar and pasta. To clarify, Nick Collard, Group Marketing and Customer Director, stated that, “These are ongoing lower price cuts, not promotions.”

Brand View has reviewed the following sub-categories: Butters and Spreads, Coffee, Dry Pasta, Eggs, Juices and Smoothies, Milk, Sugar and Sweetener, and Wrapped Bakery.

Morrisons has slowly reduced its average base price on these categories. Prior to the announced reductions the average base price fell 0.4 percent between 1 December 2014 to 16 February 2015. The recent price cuts went live on 17 February 2015 and brought the average base price down by an additional 2.4 percent.

It was widely reported that the greatest reduction was on Morrisons own label Egg & Spinach Tagliatelle (500g) which was reduced by 56 percent from £1.49 to 65p. However, Brand View can reveal that two products were even more aggressively reduced.

Morrisons own label Free From Fruit Granola (400g) which was reduced from £2.15 to 50p – a reduction of 76.7 percent. Additionally, Morrisons own label Sea Salted Pretzel Sticks (200g) was reduced by 58.4 percent, going from 48p to 20p.

morrisons average base price

Conducting a store-wide analysis, Brand View has identified 150 products that were reduced on 17 February – some 20 more than Morrisons stated. Juices and Smoothies had the greatest number of reductions (44), followed by dry pasta (22).

Morrisons’ announced that both branded and own label products would be reduced. Indeed, 95 of the 150 reductions were on own label products with the remaining 55 reductions on branded products – particularly in the Coffee and Hot Cereal

number of products reduced

Morrisons also claimed that the average reduction would be 22 percent; in fact Brand View calculate the average reduction is
25.2 percent.

The largest reductions are on fresh products such as fish and fruit with average reductions of 50.5 percent and 50.1 percent respectively. Cereals also saw large reductions; the average reduction on Hot Cereals was 50.2 percent and 41.6 percent on Ready-To-Eat Cereals.

average percentage reduction in base price

Are supermarkets keeping their price promises?

Brand View has revisited the price cuts of Asda, Sainsbury’s and Tesco to see whether they are keeping their price promises. We have looked at the same categories as the previous Insights and removed any products that have been delisted to ensure a fair comparison.

The good news for shoppers is the supermarkets have kept their promises regarding price cuts by keeping pricing stable. In fact, Sainsbury’s and Tesco have both further reduced their average base price by 0.3 percent since their respective price cuts.

Asda has also dropped its average promoted price since its price promotion, albeit only by 0.1 percent. However, for two weeks between 16 January and 30 January, its average promoted price dropped by 0.5 percent – driven by deeper discounts and additional promotions predominantly on Dairy, Bakery and Fresh Meat products.

sainsburys average base price tesco average base price asda average promoted price

Brand View has analysed the lines that each retailer reduced as part of its round of price cuts and checked to see if they have kept those lines at the reduced price. Likewise, we have continued to look at the categories that were used for each retailer in the previous price cut Insights. We have looked at the promoted price for Asda – its price cuts were part of a Rollback promotion – and base price for Sainsbury’s and Tesco.

Sainsbury’s has kept 91.6 percent of the products it reduced at the same price – the highest proportion across the three retailers. The remaining 8.4 percent of the products it reduced have since been reduced further.

Tesco kept 90.6 percent of its reductions at the same price, however the remaining 9.4 percent have now returned to their previous base price.

Of the products Asda promoted, 76.9 percent are still the same price yet 1.8 percent, classified as other in the chart below, have increased in price, but not as high as the price prior to the initial reduction.

Asda has increased the price of 4.0 percent of its reductions beyond the price set before the initial Rollback promotion. For example, the promoted price for a 12 pack of Asda Own Label Large Free Range Eggs was £2.00 before being reduced to £1.96 on 4 January. However, on 30 January the promoted price rose to £2.25 where it has remained ever since.

current price of products previously reduced

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