The prospect of a much-hyped supermarket price war in the UK grew this morning as under-pressure Morrisons slashed the price of more than 1,200 products in an attempt to regain customers lost to cheaper discount chains.
Britain's no 4 supermarket chain announced a massive raft of cuts, including reductions to big brands including Hovis, Diet Coke and Tate & Lyle Sugar as well as fresh produce and own-label goods. Morrisons say the average price cut will amount to 17%.
The move will increase the pressure on rivals Tesco and Sainsbury's, which analysts say will now be forced to respond as Morrisons moves on from reducing prices on a handful of basics such as milk to a whole trolley of well-known branded items where it is easy to compare the price tag in different stores.
New York sell-side research firm Bernstein commented early this morning saying that Morrisons had dropped "the ultimate bomb" in the price war.
"This is a big departure from the price war until now, which was (rationally) targeted at ultra-fast selling own label products to stop people from switching to discounters. Tesco and therefore Sainsbury's will have to follow," senior analyst Bruno Monteyne said.
Morrisons' boss, Dalton Philips, says the company is serious about making its products cheaper.
"I know this will be easy to characterise as a price war, or a fight-back against the discounters," he said.
"But this is not a temporary skirmish or a response to just one channel. It is about firmly re-establishing our credentials as a value-led grocer with a passion for food in a rapidly changing market."
© 2014 - European Supermarket Magazine by Enda Dowling
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