Morrisons has acknowledged it is 15% to 20% more expensive than Aldi and Lidl across own label and needs to narrow the gap in order to win back market share.

At a supplier conference in Bradford last Thursday, Morrisons own-label trading director Andy Atkinson said it was struggling to compete with the discounters because of higher overheads and fixed costs.

Atkinson said the discounters were a massive concern for the big four. He estimated Tesco had lost £45m in sales to the discounters in the first quarter of 2013 and that its losses had doubled to £90m in the first quarter of 2014.

Morrisons said it was not just Aldi and Lidl who were stealing share - it estimated half its own losses were down to other discounters, including Poundland and 99p Stores.

Although competing with the discounters on price was tough, Morrisons needed to narrow the price gap and put value back at the heart of its proposition, he said. “Our performance will improve when customers trust Morrisons’ prices again.”

Morrisons chilled category director Mark Cox also updated suppliers on the impact of its ‘I’m Cheaper’ campaign, which kicked off in May with 1,200 price cuts and continued this week with another 135 reductions. He said the first round of cuts, which averaged 17%, had delivered a hike in volume sales of about 40% and that the lower prices were here to stay.

Morrisons acknowledged some brands had been negatively affected.

The retailer’s tone was more conciliatory than usual, said one supplier: “We generally get called in every year and they put us under pressure about performance, but this was very different. It was more about updating us on performance, strategy and progress. They’re also saying ‘we get it. We’ve got problems and we’ve got to fix them.’”

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