Whilst Dalton Philips price-cutting promise, on top of profit losses relating to writedowns, and negative like-for-like sales, was not sufficient to avoid spooking the stockmarket, the company remains in a strong position…
Thanks to Ken Morrison’s conservative attitude to money, the company is asset-rich and the sale of £1bn from an 80% owned store portfolio will eventually calm the shareholders, and leave a robust retailer in place.
The CEO’s promise to cut prices permanently to a level that would not have to match those of the discounters, but to be just low enough that its fresh food and quality offer would look worthwhile, anticipates one definition of the price war....
However, the issue for suppliers is where the upcoming price-war is headed…
Will the big 3 take a similar stance to Morrisons on going ‘low enough’ to compete – giving Morrisons a fighting chance - or is the agenda to match or even undercut discounter prices, product for product, and arrest their growth…?
In which case, the discounters cannot afford to go lower, and the depth of major retailer pockets will only be limited by stockmarket reaction…, with Morrisons at a distinct disadvantage, currently.
From a supplier perspective, it is vital to stick with current pricing and trade investment strategies - and compliance conditions - and effectively sit this one out…
Thanks to Ken Morrison’s conservative attitude to money, the company is asset-rich and the sale of £1bn from an 80% owned store portfolio will eventually calm the shareholders, and leave a robust retailer in place.
The CEO’s promise to cut prices permanently to a level that would not have to match those of the discounters, but to be just low enough that its fresh food and quality offer would look worthwhile, anticipates one definition of the price war....
However, the issue for suppliers is where the upcoming price-war is headed…
Will the big 3 take a similar stance to Morrisons on going ‘low enough’ to compete – giving Morrisons a fighting chance - or is the agenda to match or even undercut discounter prices, product for product, and arrest their growth…?
In which case, the discounters cannot afford to go lower, and the depth of major retailer pockets will only be limited by stockmarket reaction…, with Morrisons at a distinct disadvantage, currently.
From a supplier perspective, it is vital to stick with current pricing and trade investment strategies - and compliance conditions - and effectively sit this one out…
No comments:
Post a Comment