Major supermarket chain Morrisons has seen its sales growth fall into negative territory for the first time since 2005, quarterly results released today reveal.
While its total sales grew by 1.5 per cent year-on-year for the 13 weeks to April 29th 2012, in underlying like-for-like terms trading fell one per cent over the period.
This slip into negative sales growth means Morrisons is falling behind some of its rivals such as Sainsbury’s and Asda, and that like sector leader Tesco it is suffering from the general squeeze on consumer spending, however the business says that its performance is broadly in-line with expectations.
A statement from Morrisons today read: “As expected, the economic environment for the consumer has remained challenging, with the high price of oil and other commodity prices putting pressure on disposable incomes.
“Against this backdrop we have continued to keep prices low for our customers without compromising on Morrisons quality.”
All of the leading supermarket groups are now trying to compete to deliver the lowest prices for consumers, and just yesterday upmarket grocer Waitrose unveiled an extension to it price matching scheme on branded items.
The latest data from research firm Kantar Worldpanel show that Waitrose and discount chains such as Aldi are stealing share from the bigger players in the sector as value becomes increasingly influential to consumer choices.
John Ibbotson, Director of Retail Consultancy at analyst firm Retail Vision, argues that Morrisons, like Tesco, has been outmanoeuvred by its main rivals in recent months.
“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,” Ibbotson said.
“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 currently trying to open more convenience style stores and is investing an estimated £400 million in revamping existing locations and its own-brand products, but Ibbotson believes this strategy may prove risky with budget grocery stores performing so well.
Despite the drop in trading the retailer confirmed today that it remains confident that full-year trading & profit figures will meet expectations.