City backs Morrisons price cuts but shoppers remain sceptical

Morrisons’ 1,200 price cuts have proved a hit with industry experts and City analysts but it looks like shoppers will take more convincing.

CEO Dalton Philips said this week it was permanently lowering the price of 1,200 everyday essential items by an average of 17%, and that it was backing this up with “a transparency on pricing not seen from an individual retailer before”.

Later this month, Morrisons will add a full list of the discounted items to its website and, using data from mysupermarket.co.uk, will display the pricing history of the items in a bid to dispel consumer fears that retailers are constantly manipulating prices.

Morrisons is also taking a new approach to pricing in which no shelf price can be raised on any product for any reason without previously being approved by Philips, group CFO Trevor Strain and group commercial director Casper Meijer at a weekly ‘Price Transparency Meeting’.

“Morrisons cannot beat the discounters on price, but it does not need to,” said an analyst’s note from HSBC Global Research published on Thursday. “It needs to gain price proximity and then needs to emphasise its differentiation - a wide range of good-quality fresh food with known provenance. This repositioning is a good move towards proximity and Morrisons now needs to reinforce its broader image.”

Kantar Retail director of retail insights Bryan Roberts was also broadly impressed. “It’s certainly a substantial move, and one that has been very strongly communicated both in-store and in the media,” he said.

“Importantly, they have combined the ‘cheaper’ messaging with a reinforcement of their credentials in quality, service and provenance - so overall it’s a great execution.

“It should help to regain some lapsed Morrisons shoppers, or shopping trips, from the discounters and rival supermarkets, and might encourage incremental spending from current Morrisons shoppers.”

However, shoppers on Moneysavingexpert.com were generally more sceptical. “Or in other words, we’ve been ripping you off for years. Sorry Mr Morrison, I’m not buying it and I’m not buying your goods either,” said one poster.

Echoing the general tone, another said: “Morrisons clearly holding on to the delusional hope that we are still just ‘dumb’ customers.”

However, a more supportive poster said: “In these glum days of constantly shrinking products, any price decreases have to be a good thing, surely? I’ll be popping in to have a look later as I’m a two minute drive away from a branch.”