Morrisons’ sales growth loses pace despite expansion of convenience store format

Supermarket Morrisons' new chief executive’s strategy to improve price competitiveness and develop a loyalty programme is working, the supermarket stated today as it reported a 4.1 per cent rise in underlying sales in its February to April quarter.

Morrisons chief executive Rami Baitieh said that price matching discounters Aldi and Lidl on key items as part of a scheme introduced in February “has had a great start.”

He added that customers’ reaction to Morrisons’ investment in its ‘More Card’ has been “very positive.” In the past eight months, transactions using the loyalty card have grown by about 35 per cent.

The group is now aiming for 70 per cent of transactions to use the loyalty card in the medium term.

However, monthly industry data is showing Morrisons’ sales growth behind that of bigger rivals, namely market leader Tesco and number two retailer Sainsburys.

Commenting on the figures, Eleanor Simpson-Gould, Senior Retail Analyst at GlobalData, said, that Morrisons is not out of the woods yet, as it will face stronger comparatives in the latter half of this financial year.

“The supermarket has announced the successful conversion of McColls stores, expanding its Morrisons Daily convenience store format to 1,600 locations and setting an ambitious target of 2,000 by 2025. Despite these efforts to augment its presence in the convenience sector, with 114 McColls stores converted in Q2, the grocer has reported a meagre 0.7 per cent uplift in convenience store sales for the quarter.

“Under the leadership of new CEO Rami Baitieh, Morrisons is taking a grassroots approach to solving the core issue plaguing the retailer during the cost-of-living crisis- its identity. The grocer reports it has taken on feedback from 340,000 stakeholders to pin down the key issues affecting its offer, which it has identified as being availability and its loyalty scheme.

"These findings are unsurprising given that the retailer has struggled to carve out a niche in a period marked by discounter price wars and intense loyalty scheme campaigning. Having announced in February of 2024 that it would price match to Aldi and Lidl, the grocer has been slow off the mark to capture transient consumers shopping around for the best prices.

"With its ‘Market Street’ heritage no longer serving as a unique selling proposition, Morrisons must swiftly leverage customer and employee feedback into its three-pillar strategy to introduce new and compelling reasons to shop at Morrisons."