Morrisons uses food manufacturing to cut prices

By Michael Stones contact

- Last updated on GMT

Morrisons boss David Potts highlighted the retailer's food manufacturing business
Morrisons boss David Potts highlighted the retailer's food manufacturing business

Related tags: Food, Morrisons

Morrisons is to harness the power of its food manufacturing capability to cut prices even further, as it battles the limited range discounters Aldi and Lidl and the other big supermarkets, its boss David Potts has revealed.

Unveiling a new three-month Price Crunch marketing campaign, the retailer pledged to slash the price of 1,072 items, focusing reductions on fresh food, such as fruit and vegetables.

“Morrisons is the UK’s second largest fresh food manufacturer and uniquely among the supermarkets, makes more than half of the fresh food it sells,”​ said the retailer in a statement.

‘Using manufacturing to keep prices down’

“It will be using its food manufacturing business to keep prices down.”

Morrisons on food manufacturing

“Morrisons is the UK’s second largest fresh food manufacturer and uniquely among the supermarkets, makes more than half of the fresh food it sells.”​ 

  • Statement

This week’s cuts average 19% on fruit and vegetables, it claimed, adding that “deep discounts”​ on peppers, broccoli, plums, onions and potatoes proved popular with shoppers.

Morrisons’ chief executive David Potts reinforced the retailer’s commitment to low prices. “We are cutting the prices of products that customers will welcome being cheaper at Morrisons and we are cutting every penny we can,”​ said Potts.

“We continue to listen carefully to customers and they have told us they want lower prices, particularly on fresh food and everyday essentials. As we improve our customers’ shopping trip we are becoming more competitive with our own distinct set of prices.”

‘Price Crunch’ will be a rolling programme of lower prices, typically lasting a minimum of three months.

Morrisons is the UK’s second largest fresh food manufacturer and uniquely among the supermarkets, makes more than half of the fresh food it sells. It will be using its food manufacturing business to keep prices down.

‘Another notch in its progress’ 

City analyst Shore Capital welcomed the new investment in low prices. “Morrisons announced today (February 1) another notch in its progress to being a more distinctive value-orientated superstore group,”​ said analysts Clive Black and Darren Shirley.

‘More progress’

“Morrisons announced today another notch in its progress to being a more distinctive value-orientated superstore group.”

  • Shore Capital 

The analysts highlighted the retailer’s pledge to use its manufacturing capacity to help deliver lower prices.

“Utilising Morrisons’ vertical integration, there are reductions to key fresh produce and meat lines; so 2.5kg of white potatoes are cut in price from 175p to 143p, 1kg of carrots is cut from 60p to 47p and a three-pack of salad peppers reduced from 100p to 86p,”​ they noted.

The Price Crunch plan should be set alongside the simplification of the retailer’s offer – with “fewer but more impact promotions and the cutting out of most coupons and vouchers” ​– improved availability, a better paid workforce and an ongoing store refreshment programme.

The analysts also noted anecdotal evidence to a growth in “trolley versus basket shoppers”.

The retailer was keen to extol the virtues of its proprietary brand offering, as well as its distinctive ‘Market Street’, the added.

Shore Capital acts a broker to Morrisons and withholds a share recommendation on house stocks.

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