Is it time for Morrisons and Asda to up their game?

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Is Morrisons on a roll and Asda in the dumps?

Tuesday’s Kantar Worldpanel data would certainly suggest so.

In a complete reverse of the situation this time last year, it appears that customers are returning to Morrisons and ditching Asda.

Morrisons’ revival follows a complete overhaul under the new management team led by ex-Tesco chiefs David Potts and Andy Higginson, who appear to have resurrected trust in the brand.

Importantly, they have gained the backing of Sir Ken Morrison, who has applauded their determination to take the group back to the basics that he adhered to during his tenure - namely low priced, fresh food with no gimmicks.

The Bradford-based grocer has seen its first market share gains since 2011 and was the only one of the big four to see positive sales growth in the 12 weeks to June 21.

Morrisons was boosted by its successful entry into online shopping and sales rose 0.6 per cent over the three month period, increasing its market share to 11.0 per cent from 10.9 per cent a year ago.

Kantar said that although this is a modest increase, it’s significant as it is the first rise since December 2011.

​Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said there is a very loyal core of Morrisons shoppers that admire the brand and what it stands for.

In sharp contrast to Morrisons’ revival, the UK’s second biggest grocer, Leeds-based Asda was the worst performer among the big four with a 3.5 per cent decline over the three month period.

A big question about Morrisons’ recovery is how much of its sales increase has it bought through money off vouchering? This is a process Asda’s Andy Clarke has likened to The Bank of England’s quantitative easing programme.

Asda looks to be in trouble, but it has refused to join in the money off coupons adopted by Morrisons and Tesco as they try to lure back disgruntled customers.

Mr Clarke believes that this sort of short term discounting has to end soon as it’s unsustainable.

Mr McKevitt said: “Asda certainly seem to be holding their nerve. They have deep pockets.

​“But Asda are starting to lose market share. It’s not that shoppers are deserting them​, it’s just there are a lot of other options with the discounters and Tesco cutting prices.”

Here lies the nub of the situation.

If Asda’s rivals do stop the vouchering, as they must do over time if they are to revive profits and keep investors on board, won’t customers just turn to the discounters?

According to the latest Kantar statistics, Aldi has reached a new high with a 5.5 per cent share of the market after increasing sales by 15.4 per cent and Lidl stands at 3.9 per cent market share after increasing sales by 9.1 per cent.

Aldi announced its expansion plans for Yorkshire this week. The German discounter is to open six stores in Yorkshire over the next 18 months as it steadily encroaches on Asda and Morrisons’ home turf.

Meanwhile Lidl is moving on from being a pure discounter to talking about the quality of its products and the awards it has won.

“Lidl is starting to look more like a mainstream supermarket,” warned Mr McKevitt.

This is a worrying development for Yorkshire’s big two grocers. At the moment their main line of defence is that they have 10 times the number of products that the discounters have.

But do people really need this? Many people no longer visit a big supermarket for the weekly shop. Groceries can be bought from convenience stores as you pass them on the way home and a fortnightly online order can provide the rest.

Aside from online, the real growth at the moment is coming from convenience - an area that Tesco and Sainsbury’s dominate.

Is it time for Morrisons and Asda to up their game in this crucial area?