Morrisons, the UK's fourth-largest supermarket, has announced price cuts on 200 “everyday items” by up to a third, intensifying the ongoing price war among major grocers. The reductions include an 11% drop on four pints of semi-skimmed milk to 89p and a 21% fall on some bread brands.
New chief executive David Potts said the cuts would ensure that prices for “cupboard essentials will be amongst the lowest on the market.” The move follows a dire year for Morrisons, in which profits halved to their lowest level in eight years, prompting the chain to commit £1 billion over three years to lowering prices.
The price war has been driven by the rise of discounters such as Aldi and Lidl, as well as the growth of online shopping. All of the “big four” supermarkets—Tesco, Sainsbury’s, Asda, and Morrisons—have been forced to respond. Asda has committed £300 million to price reductions in the first three months of the year, Sainsbury’s invested £150 million to cut the cost of 1,000 products, and Tesco dropped prices on 2,500 “essentials.”
According to analyst Kantar Worldpanel, a typical basket of everyday items is now 2.1% cheaper than in 2014, with all major retailers offering cheaper like-for-like goods. Despite these efforts, discounters continue to gain market share: Lidl reached a record high of 3.9% and Aldi rose to 5.4% in the 12 weeks to 24 May.
