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Struggling supermarket Morrisons have reported a sharp fall in sales. Like for like sales, excluding fuel fell by 7.1% in the thirteen weeks covering February to the beginning of May. We wrote about the supermarket chains plans to restructure the business , including plans to cut prices on many products. This was in an attempt to win back customers and compete with discount supermarkets such as Aldi and Lidl.
A lack of smaller convenience stores was highlighted by analysts as one reason the chain was struggling to keep up with other rival chains. Morrisons have since revealed that they are on track to open 200 new convenience stores by the end of 2014. The online side of the business was another factor suggested for their falling sales. With a limited online presence, compared to other big supermarket chains, Morrisons have said their new online business strategy was performing ahead of expectations and should reach up to half of all UK households by the end of the year. With recent bold advertising campaigns, including projecting a baguette onto the iconic Angel of the North statute, to highlight price reductions show the Bradford-based supermarket isn’t giving up just yet.
Back in March they warned that profits would be affected as they cut prices across the store. Chief Executive, Dalton Philips said; “The plans we set out at our results in March are on track.” He went on to say; “The reaction of our customers to the 1,200 ‘I’m Cheaper’ price cuts we announced… 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 point of difference to resonate strongly with consumers.”
The fall in sales was a hotly debated topic at the recent annual shareholders’ meeting. Ex-chairman, Sir Ken Morrison, was expressing his views on the 7.1% fall; “The results were described by the chairman and chief executive as ‘disappointing’. I personally thought they were disastrous.”
Managing Director of retail analysts, Conlumino, Neil Saunders described the latest figures as ‘woeful’ saying they highlighted “an alarming deterioration in trade”. He said; “The game now is one of market share stealing: any player that wants to grow has to take share from another.”
All ‘big four’ UK supermarket chains, Tesco, Sainsbury’s, Asda and Morrisons have recorded a drop in sales over recent months. As a result, they have been losing market shares to cheaper Aldi and Lidl. While Morrisons continue to try and turn things around with their price cuts and restructuring plans, it is unclear whether it will be enough for them to recover.