Morrisons is set to lose its market share as sales slump due to stronger competition, according to GlobalData’s 2022 Q2 consumer survey.
Sales for Morrisons have dropped by 6.4% year-on-year for the second quarter, amid what the supermarket giant has described as a “very fragile and difficult consumer environment”.
In a trading update for the 13 weeks to 1 May, the grocer said it had experienced a “very challenging” trading environment as it blamed soaring inflation and falling customer confidence for the slump in its Q2 sales.
Meanwhile, total revenue was given a 2.5% boost to £4.6 billion, driven by a 54% increase in fuel sales.
READ MORE: Is Aldi set to break the Big 4 by toppling Morrisons?
GlobalData consumer analyst, Amira Freyer-Elgendy, offers her view: “An underwhelming set of results from the grocer and its delay in pushing value for shoppers makes Morrisons vulnerable to losing market share this year.
“According to GlobalData’s 2022 Q2 consumer survey, 62% of UK shoppers are extremely concerned about their personal financial situation and with tangible rises in household bills offsetting any increases in wage growth, combined with food inflation, consumers are cutting back – especially those in lower income groups.
“Of the other major grocers, Morrisons has been slow to react and adapt to this new budget squeeze to avoid losing customers. The grocer launched its price cuts in April, alongside Asda which promised to keep the prices of selected everyday essentials low until the end of the year.
“Morrisons’ discount strategy does not make any such promises, and while this is probably wise given inflation continues to climb, it may limit the appeal of its price cuts versus rivals.
“This trading update did indicate, however, that the retailer will do more in coming months to help shoppers navigate the cost-of-living crisis – though this may be too little too late as shoppers have already started to switch and shop around.
“Both the UK convenience and the Q-commerce markets will outperform over the next five years, so while these are strategic moves, attention on its core grocery offer must not drift else it risks losing its fourth-place market position to Aldi.”
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