SUPERMARKET Morrisons has revealed a further slide in sales as its bigger rivals stepped up the pressure with money-off coupons and special offers.
The UK’s fourth-biggest grocery chain reported a 2.1% drop in third quarter like-for-like sales, excluding VAT and fuel, and warned the market is set to remain challenging.
Morrisons has been left trailing as competitors wage war through promotional deals, with its third quarter performance marking a deterioration on the 0.9% sales fall seen in the first half of the financial year. Morrisons said: “With consumer confidence still fragile and high levels of promotional activity a persistent feature of the market, the trading environment has remained challenging through the period and sales were lower than anticipated.”
It added full-year figures were predicted to be “broadly” in line with its expectations.
In another blow, the group also announced the departure of commercial director Richard Hodgson, who was one of the first key hires made by chief executive Dalton Philips after he took over at the group in 2010.
The group admitted it has not done enough to advertise its promotions and communicate its strengths as a fresh food chain to shoppers.
Philips, who has previously said the group would not be drawn into a promotions war with rivals, said discounts were going to be vital in the run-up to Christmas.
The group, which launches its Christmas range on Sunday, said it will be offering deals to appeal to cost-conscious shoppers, including a Christmas meal with all the trimmings from £2.49 per person.
“A third of the families we’ve talked to said they would be cutting back on presents this Christmas. They’re going to still celebrate but will be very focused on value,” said Philips.
Morrisons has been losing out to rivals as its lack of convenience stores and any online food offering has held it back.
The latest data from Kantar Worldpanel showed its market share slipping from 12% to 11.5% in the 12 weeks to October 28, with a resurgent Sainsbury’s notching up the best growth.
But the group said it is on target to have 70 convenience stores by the end of next year and recently launched its online Morrisons Cellar wine range with plans to update on a full internet offering by next March.
It also this week confirmed it is launching its own in-store clothing range called Nutmeg, which will go on sale from March, while it continues to roll out its Fresh food format.