Suppliers ‘won’t be hit’ by Morrisons’ price cuts

“As with all the previous tranches of price cuts, Morrisons is investing in the cuts,”​ a spokeswoman for the retailer told FoodManufacture.co.uk. “We are not passing the cost on to our suppliers.”​

Clive Black, director and head of research at Shore Capital, welcomed the news, announced earlier this week (February 16). “To be fair to Morrisons it started cutting prices in earnest last May, following on really from Asda’s lead,”​ he told this site.

“These price cuts, therefore, are part of a continuum to invest £1bn in its proposition over three years, funded by cost savings and reductions in cash outlays. ​The execution is quite effective, better than we’ve seen in recent times from Morrisons, with a co-ordinated approach to the reductions in-store. The cuts cover brands and ​[own-label] with decent cuts across ​[own-label] dried pasta, for example.​

‘Re-awakening of the superstores’​

“While some cuts maybe a little me-too, this is further demonstration of the re-awakening of the superstores and the narrowing of the price advantage of the discount operators.”​

Morrisons announced that it was immediately cutting the regular price of more than 130 shopping basket staples by an average of 22%. The strategy was designed to apply to items that customers put in their baskets most regularly, it said.

The price of essentials, such as bread, milk, butter, eggs, coffee, sugar, fruit juice and pasta would fall by up to 56%, it claimed.

Warburtons, Nescafé, Kellogg’s​

The cuts would contribute to continuing food and drink deflation and would cover branded and own-label goods the retailer said. Warburtons’ White Medium Loaf (800g), Nescafé Original Coffee (300g) and Kellogg’s Corn Flakes (500g) were all included in the price reduction campaign.

“These are ongoing lower price cuts, not promotions,”​ said Morrisons’s group marketing and customer director Nick Collard.

“The price cuts we have now made across products that customers buy week in, week out, are making a real difference to the cost of the weekly family shop.”​

Sainsbury and Asda​

The announcement followed campaigns announced by Sainsbury and Asda in January to drive prices down​. On January 7, Sainsbury said it would be investing £150M in slashing the prices of more than 1,000 of its products.

At the time, Morrisons confirmed that it would be investing £1bn in its offer over the next three years, which would support activities such as price cutting.

The day before, Asda revealed that it would invest £300M in the first quarter of 2015 on reducing prices across 2,500 best selling lines.

Price cut table​