Morrisons reports 2.9% like-for-like sales fall, as discounters and premium players take market share

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Morrisons has reported a 2.9% fall in like-for-like sales for the three months to 3 May 2015, as discount retailers and premium players continue to take share from the UK’s fourth largest supermarket.

Himanshu Pal, director retail Insights, Kantar Retail said Morrisons’ value proposition is stuck in the middle.

“The discounters, as well as the premium players such as Waitrose and M&S Simply Food, are chipping away at Morrisons’ market share,” he said.

“It has been baptism by fire for Morrisons’ newly appointed CEO David Potts as the retailer continues to witness declining sales and market share erosion.”

According to Pal, Potts hit the ground running by increasing numbers of staff on the shop floor, simplifying pricing and promotion, and analysing shopper data collected through Match and More. But the rewards are yet to be realised, he said.

“It’s an uphill challenge reinvigorating Morrisons’ fortunes as today’s results prove. Not only because of the general declining footfalls at big supermarkets but the retailer is also significantly underrepresented in convenience and online channels.

“The increased price investment is adversely impacting profitability and cash reserves, limiting resources available for capital expenditure.”

Pal advised Potts to look for inspiration from its UK peers to revitalise its bigger stores – such as subletting some of the excess space to non-competitive retailers and rationalising its in-store assortment.