Blackfriar: Morrisons back to its best as affluent shoppers pop in

Strong demand for products such as “The Best Canadian Lobster & Cromer Crab Macaroni Cheese​“ has made Morrisons a destination shop for wealthy consumers.

Mr Potts has achieved what predecessor Dalton Philips unsuccessfully tried to do with his ill fated vegetable misting machines. ​Wealthy shoppers like a bargain and Morrisons is catering to them.

The latest Kantar Worldpanel data shows that Morrisons​ is the fastest growing big four retailer​.

Kantar said ​premium own label lines are see​ing huge growth and Bradford-based Morrisons is really tapping into demand for luxury food.

In times of economic hardship, consumers tend to cut back on non-essential spending such as holidays, eating out and big ticket items.

In such straitened times, people like to treat themselves. If they can’t afford a meal out in a restaurant or a holiday abroad where beer, wine and food will cost 15 per cent more thanks to the fall in the pound following the Brexit vote, they can afford to treat themselves to some fine dining at home.

Best sellers in the new premium range include Morrisons The Best Lasagne Al Forno​ (£4.50)​, Apple Frangipane Tart​ (£3.46)​ and an award winning South Afican Sauvignon Blanc (£7).

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “It’s about value. People are willing to pay higher prices as long as the product is really good. Morrisons is doing that​.​

​“​It is attracting consumers who wouldn’t have shopped there before.”

​Morrisons was the fastest growing big four grocer ​over the 12 weeks to April 23, with sales rising 2.2 per cent to £2.76bn, according to Kantar Worldpanel.

Morrisons and market leader Tesco are both in turnaround mode after going through disastrous periods while number two player Sainsbury’s market share has remained broadly stable over the last five years.

Some analysts believe Sainsbury’s is vulnerable to further price cuts by Tesco and a recovering Asda.

Meanwhile​ Sainsbury’s continues to lose market share to both Tesco and Morrisons although its takeover of Argos has boosted sales.

John Ibbotson, director of the retail consultancy Retail Vision, said: “What began as a bolt-on has turned into a lifeboat. For the embattled Sainsbury’s, the Argos acquisition is looking more inspired by the day.

“Argos is undoubtedly the trump card responsible for the solid increase in group sales.

“But while CEO Mike Coupe will be keen to dismiss the fall in underlying profits as a blip brought on by the cost of the acquisition, this should not distract from the weaknesses in the core Sainsbury’s grocery business.

“The convenience and online offerings are a bright spot in an otherwise challenging picture. Food price inflation has slashed margins and Sainsbury’s continues to lose market share to both Tesco and Morrisons.”

To be fair, Tesco and Morrisons were performing so badly before that their sales increases are to be expected compared with previous poor trading performances.

Sainsbury’s is the only one of the big four not to have suffered a major fall and so its figures don’t flatter like its rivals’.

Today Morrisons is expected to report steady sales growth when it releases first quarter results, despite rising food prices linked to the post-Brexit vote collapse of the pound.

Like-for-like sales growth is expected to reach 1.7 per cent in the first quarter, according to Jefferies, while Shore Capital is forecasting an increase of between 1.75 to 2 per cent.

Mr Potts has ploughed investment into price cuts and called time on under-performing stores in his attempts to turn the page on the supermarket’s ill-fated era under ousted boss Dalton Philips.