Asda And Morrisons Cut Prices Amid Cost Of Living Crisis

Namnews, 25th April 2022

Asda and Morrisons have both today announced cuts to the price of everyday grocery products to help their customers with the rising cost of living.

Asda stated that it was investing more than £73m to reduce the prices of over 100 items, including fruit & veg, meat, rice, soft drinks, cheese, yogurts, and frozen products. The cuts on both branded and own-label lines average 12% and will be “locked” until the end of the year.

The move comes just weeks after the supermarket announced plans to launch a new value range called ‘Just Essentials at Asda’. Covering 300 lines, it will start rolling out next month and replace Asda’s existing Smart Price products.

Asda also confirmed today that its 120,000 hourly paid shop floor staff will see their pay increase to £10.10 per hour from July. It comes after Tesco increased its basic pay to £10.10 per hour earlier this month while other supermarket groups have also increased wages amid soaring inflation.

And Asda unveiled plans today to invest over £2m in local communities by funding activities such as summer holiday clubs and events for those most impacted by the cost of living squeeze.

“We know that household budgets are being squeezed by an increasing cost of living and we are committed to doing everything we can to support our customers, colleagues and communities in these exceptionally tough times,” said Mohsin Issa, co-owner of Asda.

Meanwhile, Morrisons is lowering prices on more than 500 everyday products, which together account for 6% of its total volume sales.

The private equity-owned retailer said its price cuts were some of its biggest in recent years and included items such as eggs, baked beans, rice, coffee, cereals, meat, cereal, and nappies. It stated that the average saving was 13%.

Morrisons has also included 180 more products in improved multi save promotions such as ‘Buy 2 for £1.80’ on cereals and ‘Buy 2 for £5’ on ready meals.

As well as the price cuts and multi saves, the retailer has launched a ‘Compare & Save’ campaign in store to help shoppers identify savings that can be made by swapping branded items for its own-label products.

“We know that our customers are under real financial pressure at the moment and we want to play our part in helping them when it comes to the cost of grocery shopping,” said Chief Executive David Potts.

Surging grocery prices appear to be forcing consumers to adjust their shopping habits to save money, including shifting their spend to discounters and own-label. Morrisons looks to be one of the biggest losers from consumers trading down with recent data from Kantar showing the retailer’s sales fell 11.5% over the 12 weeks to 20 March, more than any other major chain.

NAM Implications:

• Both retailers are suffering falling sales vs other mults.
• A key issue might be can/will they run at a loss for say three years of their private equity 5-year re-flotation window…
• …just to regain/maintain market share?