Price wars as new owners of Asda and Morrisons throw millions at cuts

A big four supermarket price war kicked into overdrive today as both Asda and Morrisons announced multimillion-pound investments in cuts.

Morrisons said it was launching “one of the biggest price cuts in recent years” with the prices of more than 500 products reduced, as well as a raft of multi-save offers and a new price comparison mechanic urging customers to switch to own label from brands.

Meanwhile Asda revealed it was investing £73m to tackle the cost of living crisis, including the prices of more than 100 staple products being “dropped and locked” and a 4.5% pay rise for shop floor staff.

Morrisons, which earlier this month issued a warning that its profits could be hit by rising inflation and the war in Ukraine, said its price cuts would cover 6% of its total volume sales, with products covered including cupboard essentials, fridge staples and frozen food.

Cereals, cooking sauces, chicken and sausages, eggs, baked beans and rice would be reduced by an average of 13%, it said.

Morrisons has cut the price of a quarter of its 235 entry-level products which include ‘Morrisons Savers’, ‘Morrisons Wonky’ in produce and ‘Morrisons Essentials’ in homeware and health & beauty.

Meanwhile, more than 180 products have been included in new multi-save promotions including a ‘buy two for £1.80’ on cereals, a ‘buy two for £3’ on breaded chicken and a ‘buy two for £5’ on ready meals.

The supermarket has announced a new ‘Compare & Save’ campaign which it said would help customers identify savings from swapping branded items for Morrisons own brand products.

Its cuts will be communicated via a major advertising campaign and point of sale with a Morrisons Savers event taking place in the seasonal aisle until 8 May.

“We know our customers are under real financial pressure at the moment, and we want to play our part in helping them when it comes to the cost of grocery shopping,” said Morrisons CEO David Potts. “These price cuts will have a noticeable and long-term impact on our customers’ budgets and demonstrate our commitment to offering them the best possible value.”

Asda said its move to support UK households and its staff came with a survey it carried out showing 90% of customers were concerned about inflationary pressures and soaring grocery prices.

It said the “sweeping measures” included price reductions for a raft of household favourites, including fresh fruit and vegetables, fresh meat, store cupboard favourites like rice and noodles as well as soft drinks, desserts and frozen products.

Read more:

•  Asda cheapest by 2p as grocers keep lid on inflation

• How much is a pint of milk? Not enough, more than it was, lower than it will be soon

• No one wins a race to the bottom. Brands have to avoid a price war

Products covered by the “dropped and locked” promise will reduce by 12% on average and include staples such as John West tuna, dropping by 14% from £3.50 to £3, and Asda easy cook rice 500g which has dropped by 25% from £1 to 75p.

The investment comes just weeks after Asda revealed it was launching a new Just Essentials budget range across 300 product lines, which will begin being rolled out from next month.

Asda also announced 120,000 hourly paid shop floor colleagues would see their pay increase to £10.10 per hour from July.

The move will see staff receive an additional 60p on top of the national living wage as well as a 10% colleague discount in stores and online, and additional supplement for staff working in London stores.

Staff also have the opportunity to achieve a bonus of up to £400 at the end of the year, with Asda claiming the combined package made Asda the “highest paying UK supermarket”.

“We know household budgets are being squeezed by an increasing cost of living and we are committed to doing everything we can to support our customers, colleagues and communities in these exceptionally tough times,” said Asda co-owner Mohsin Issa.

“We’re standing side by side with the families and communities who are juggling so many demands now. We’re taking unprecedented action to give families some additional stability and certainty in their weekly shopping by lowering and locking over 100 prices until the end of the year. We’re also proud to be investing in increasing the pay for our hardworking store colleagues and continuing to support the communities we are part of.”

Reacting to the pay rise, GMB national officer Nadine Houghton said: “It is fantastic news that people working in Asda stores will have more money in their pockets. It is what they deserve and urgently needed with the rising cost of living.

“GMB members in stores across the country have been campaigning hard to get Asda bosses to deliver better pay. We’re glad they have listened.

“Retail workers, predominantly women, face the reality of living with low pay every day. Employers everywhere need to step up and properly reward these key workers who keep our high streets running.”