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

By Rod Addy contact

- Last updated on GMT

Morrisons hopes the cuts will make a real difference to the weekly family shop
Morrisons hopes the cuts will make a real difference to the weekly family shop

Related tags: Supermarket, Asda, Morrisons

Morrisons has stressed the price cuts it has announced will not rebound on suppliers, but will be entirely funded by the supermarket chain itself.

“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

Item

Old Price (£)

New Price (£)

Saving (%)

Warburtons White Medium Loaf, 800g

1.45

1.00

31

Morrisons milk, 4 pints

1.39

1.00

28

Morrisons Savers Butter, 250g

0.99

0.91

8

Morrisons medium free range eggs, 6 pack

1.39

0.99

29

Nescafé Original Coffee, 300g

7.45

5.79

22

Silver Spoon granulated sugar, 2kg

1.55

1.20

23

Kellogg’s Corn Flakes, 500g

1.45

1.09

25

Morrisons orange juice, 1 litre

1.00

0.69

31

Morrisons spaghetti, 500g

0.95

0.59

38

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2 comments

Suppliers won't be hit by Morrisons' price cuts

Posted by M Mustard,

Morrisons have just threatened their suppliers with delisting unless they meet their demanded for a 3% price reduction.

Report abuse

Yeah, right

Posted by Pie Face,

Of course they are passing it on to suppliers, many of whom are just barely breaking even. Suppliers are just too scared to lose the business to speak out.

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