UK: Morrisons seeks supplier backing amid intense competition

Britain's fourth largest supermarket group, Wm Morrison, has signalled to suppliers that it wants more support for promotions to combat increased competition in the grocery sector, according to the Financial Times.

Suppliers said they expected Morrisons to begin negotiations over the coming weeks, reflecting the supermarket's desire to reach agreements by early next year, ft.com reported.
 
The move is said to signal changes at Morrisons, which is under a new management team led by chief executive Marc Bolland and has seen the business expand both sales and profits.

The competition between Britain's top four grocers is said to be stepping up as food price inflation falls, which typically means that supermarkets have to sell more goods to maintain the same sales momentum.

One supplier told ft.com that it believed Morrisons' move reflected concerns that the supermarket (traditionally able to take a lead on promotions because about 20 per cent of its products came from its own supply base) was falling behind rivals Tesco, Asda and J Sainsbury in terms of promotional activity, which is partly funded by their suppliers.

The supplier said it would agree to support promotions only if there were benefits to its own business.

The FT quotes Morrisons as saying: "We are strong supporters of British producers and farmers, and we have always enjoyed good relationships with our suppliers. Any recent negotiations have been part of business as usual."


About Wm. Morrison Supermarkets plc

Wm Morrison Supermarkets PLC is a United Kingdom-based company engaged in the operation of retail supermarket stores. Its business is mainly related to food and grocery. The Company’s wholly owned subsidiaries include Bos Brothers Fruit and Vegetables BV, Farmers Boy Limited, Farock Insurance Company Limited, Neerock Limited, Wm Morrison Produce Limited, Rathbone Kear Limited and Safeway Limited. During the fiscal year ended February 1, 2009 (fiscal 2009), the Company had 382 stores and 12 distribution centers. During fiscal 2009, the Company opened nine stores at Giffnock, Gorleston, Whitefield, Kidderminster, Granton, Northallerton, Blandford Forum, Clifton (Nottingham) and Holyhead.

 

Publication date: 11/3/2009

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