Morrisons are cheaper...
1 May 2014
The totem board is apparent as soon as you enter the store, a clever use of the 'M' as 'I'm cheaper'. Highlighting 'everyday cheaper' prices.
New skirts are used at the base of pallets, with cheaper prices highlighted, with some multibuys remaining in place.
Some of it is perhaps overkill but the message on launch day is clear to see. Prices are cheaper, these are permanent cuts and remaining at this level.
The split looks to be 50/50 Own label versus branded, some really solid work across the piece.
Overhead PoS highlights nearby products as 'love x?, love them cheaper'. Similarly a basket of goods pictured is now £9.07 cheaper post these price cuts.
Branded products are also included, this new lower price on a deal centric product like Jammie Dodgers puts the onus onto Sainsbury's (brand match), and indeed reminds the variety stores like B&M that things won't be as easy.
Butter is brought down to £1 which is a response to the cuts by Asda and Tesco. With suppliers also getting in on the act, with McCain 'big bags' reduced to £3.
Some products have been brought into line with the discounters, who of course, this campaign is aimed at. The 1200 lines shows that, given the broad 1300 that Aldi stock.
A preference for simplicity is now wanted by the UK consumer, they're happy to pay one price for a product and don't want prices moving around when they've a set budget for shopping.
Scale is being used too, these Sausages come via internal manufacturing facilities.
A great example of the recovery versus the discounters is the reduction in the price of tin foil. An item that customers know has no variability. Foil is foil.
Lidl sell theirs at £1.99, Morrisons did sell theirs at £3.99 but today reduced it to £1.99, bringing them into line with the discount market.
An interesting shift is moving products such as Coca Cola mulitpacks to a low price rather than using deals.
Coke was usually £3.99 > £1.99 on a half price mechanic, but the turn of the year saw Coke increase prices to £4.39 which meant the £1.99 price point was a 'better than half price' deal.
Morrisons have reduced the base price of multipack Coke to £2.64 which is a major price cut within the market. Will that be preferred by customers who can get frustrated waiting for a strong deal to 'afford' Coke.
Produce has been an area where Morrisons have steadily reduced prices since the turn of the year, and further reductions are evident in this campaign. More hanging PoS is used to highlight these reductions.
As a first phase, it's a huge statement.
The discounters have slowly eaten away at Morrisons, especially with the northern overlap. Consider that Asda have been closing the gap with Aldi, meaning the gap between Asda and Morrisons has widened.
These cuts today will rectify that, and indeed close the gap on the discounters to a tolerable level.
Every customers likes lower prices, so this will appeal to their core shopper. However, the business will take time to show the progression; given that even more food has to be sold at a lower price in order to grow sales.
The fascinating aspect is now the competition; we know Asda will respond, Tesco will have to take a look at some of the products but can they afford to go as 'big' as Morrisons on some of these products?
The interesting one is Sainsbury's; already trading on a poorer margin than their peers. How do they respond?
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From the Grocery Insight newsletter archive, first sent to subscribers on 1 May 2014. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.