Morrisons sales slip again as it cuts vouchers and prices

04/11/2015
Supermarket reports another quarter of falling sales.
Morrisons, Britain’s fourth biggest supermarket, has suffered another quarter of falling sales after scaling back its money-off vouchers and battling deflation.

The grocer’s chief executive David Potts is attempting to turn the company around with a "back to basics" approach and has said that he wants Morrisons to have its own value proposition rather than be a “price matcher” against its rivals.
Mr Potts said that Morrisons was now closer to German discounter Aldi in terms of price than last year and committed to investing further in reducing the costs of shoppers' baskets.
Like-for-sales at the grocer, which strip out the effect of new stores opened this year, fell 2.6pc, excluding fuel, in the 13 weeks to November 1. Total sales, excluding fuel, fell 2pc.
However Mr Potts said that the pace of the decline had slowed, pointing to last year’s 6.3pc slump in third-quarter sales.
The chief executive expects the crucial Christmas trading period to be “competitive” but said that he expected a “better Christmas than the business is used to”.
Morrisons' festive advert, which debuts on Friday, ditches celebrities Ant and Dec in favour of featuring its own shop staff.
The advert, Mr Potts said, would hammer home that Morrisons is a “maker not just a shop keeper” and feature handbaked Pannettone for £2. Morrisons is unique in still owning bakeries, abattoirs and fisheries, which the supermarket plans to emphasise over the coming months as a way to lure back shoppers.
Last month the grocer changed its Match & More loyalty scheme so that customers are given five points for every £1 they spend in Morrions. However, the supermarket will no longer match its rivals' prices and reward customers with points if a product is cheaper elsewhere.
Mr Potts said that customers understood the move and that scrapping the old scheme was the right decision for the supermarket.
• How Morrisons is changing Match & More
Trevor Strain, Morrison’s finance director, said that cutting the number of coupons had reduced like-for-like sales by 2.4 percentage points, while food price deflation also hurt sales by 2.2 percentage points.
Mr Potts revealed that Morrisons had held further negotiations with Ocado about how to extend Morrisons’ online reach. In September the chief executive signalled that he was unhappy about not being able to serve Scotland, where Morrisons has 60 supermarkets, but no delivery capabilities.
Around 52pc of the UK population can now receive a Morrisons grocery delivery, but in Scotland the chain has lost 19pc of its sales to Asda and Sainsbury’s online offer. “We are trying to figure out how we can reach that with our contractual partner and use our own software," he said.
The former Tesco executive has wasted little time so far in overhauling the supermarket since he joined in March, taking over from the ousted Dalton Philips.
As well as scrapping the promotion scheme, he has closed 21 supermarkets, culled 720 head office jobs, reshuffled the board and sold off 140 of its M Local convenience stores.
However, Morrisons is now dipping its toe back into convenience by trialling five small shops at Moto Fuel Group petrol stations in what Mr Strain described as a “low-capital move”.
Morrisons was dispensing with "costly and distracting whistles and bells such as coupons and vouchers, complex promotions, and monthly schemes and... replacing them with a more straightforward offer revolving around product, price and promotion", said analyst Darren Shirley at Shore Capital.
"Such a change in strategy is being implemented at pace, to the short term detriment of sales," he said.
"But within the plans we see generally stronger store disciplines, cleaner stores, improved availability and more impactful promotions year-on-year."
Morrisons had a 10.8pc share of the UK grocery market in the 12 weeks to October 11, and its sales were down 1pc on a year earlier, according to Kantar Worldpanel.
It trails Tesco, Asda and Sainsbury's in annual sales and, like them, has faced stiff competition from fast-growing discount grocers such as Aldi and Lidl.

By:http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11976546/Morrisons-sales-slip-again-as-it-cuts-vouchers-and-prices.html

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