Morrisons feels mid-market squeeze as like-for-like sales dip 1% in first quarter

Morrisons: exposed mid-market position?

Morrisons: exposed mid-market position?

Morrisons is feeling the squeeze in the mid-market with a 1% fall in like-for-like sales in the first quarter, according to retail consultancy, Retail Vision.

While the supermarket claimed it had made a “satisfactory start to its new financial year” with total sales up 1.5% in the 13 weeks to 29 April 2012, John Ibbotson, director of the retail consultancy Retail Vision, said: “The supermarket middle ground has turned into the supermarket battleground. And on the evidence of these figures, Morrisons is under attack.

“Its like for like sales fell 1% in the first quarter – an underwhelming performance its management statement meekly described as “in line with expectations”.

“While players at the top and bottom ends of the market – like Waitrose and Lidl – are thriving, the big beasts in the middle are fighting ever harder for a share of a shrinking market,” said Ibbotson.

“Morrisons’ biggest and best weapon was always price. But for some time, Asda has been consistently cheaper. And Sainsbury’s clever Brand Match scheme has neutralised any price advantage the two northern firms might have enjoyed.

“Stripped of its cheap prices trump card, Morrisons is suddenly looking exposed.

“It missed the boat on both convenience stores and online shopping. It doesn’t offer a loyalty card or home delivery.

“So it’s no wonder its customers are drifting away to cheaper rivals like Netto which, just to rub salt in the wound, was recently bought by Asda.

“Morrisons is hoping to fight back with a big revamp, which some estimate will cost as much as £400m. It’s a high-cost and high-risk strategy for a brand that is being simultaneously squeezed by big mid-market players encroaching on its space, and cost-sensitive customers ditching it in favour of bargain rivals,” said Ibbotson.