A major round of price cuts unveiled by British retail chain Morrisonson a wide range of grocery items – including fresh fruit and vegetables – is being viewed as a move designed to head off increasing competition from the fresh food offer presented by German discounters in the UK.
The group said the launch of the I'm Cheaper campaign, heralded by television and print advertising, as well as the distribution of free fruit outside the chain's London Bridge branch, marked 'the start of a new cheaper Morrisons', with prices cut on around 1,200 of its customers' favourite products, including apples, pears, citrus, tomatoes and carrots.
A new website, powered by mysupermarket.co.uk, will also allow shoppers to view a product's pricing history, a move clearly aimed at facing up to the discounters as well as the price-driven approach already adopted by rival chain Asda.
'Not temporary reductions or supermarket smoke and mirrors, these are new every day low prices on the things you buy every week,' the company declared. 'So you'll notice the difference with every shop.'
A pack of five or six vine-ripened tomatoes, for example, has been reduced permanently to £0.99 from £1.69, while loose tomatoes will now be sold at £1.55 per kg instead of £1.99 per kg.
Changing competition
Speaking at FPJ Live, which took place in Birmingham on Wednesday (30 April), IGD chief economist James Walton said Morrisons' planned price cuts were a reaction to the increasingly sound reputation being gained by discount retailers when it came to fresh food.
'Morrisons is now benchmarking against the discounters and it has accepted that it must reduce its margins,' he told FPJ editor Michael Barker, adding that mainstream supermarkets were now having to compete more fiercely on price while attempting to preserve a point of difference in terms of quality and service.
'The discounters themselves have changed. The very stark, German experience has gone and investment has been made in stores and products; in fact, it's the fresh food that now drives business to those discounters.'
Commenting on the move, Morrisons chief executive Dalton Philips suggested affordability was something that had become more of a priority for consumers as discounters made more of an impact on the market.
'We pride ourselves on being friendly people who make great food affordable for everyone, and today we're making it even more affordable.'
He added: 'We live in a changing market: online's growing, convenience is growing and we've seen the rise of the discounters, and at Morrisons we're adjusting. We're adjusting in online, we've got a very strong growing business in convenience. We need to offer even better value and that's what today's about.'
The retailer has been working on the permanent price cuts since March, after reporting a £176m loss for the year to the end of February - down from a profit of £879m the year before.
Growers have previously expressed concerns that proposed savings worth around £1bn set out in Morrisons’ restructuring and cost cutting plan could threaten the viability of many in the supply chain.
'This is only one part of the investment, and forms part of the overall £1bn announced across the three years,' revealed Steve Dresser, director of analyst Grocery Insight.
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