Business

Morrisons pins hopes on loyalty card

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Media captionMorrisons chief executive Dalton Philips: "We are matching the discounters"

Morrisons has announced a new loyalty card scheme in an effort to seize back the initiative in the supermarket wars.

The retailer says its Match & More card will award points equivalent to the difference in price on items that are cheaper in other supermarkets.

Morrisons said its scheme provided a price match guarantee against discount chains Aldi and Lidl, as well as Tesco, Sainsbury's and Asda.

Morrisons recently reported a fall in half-year profits of more than 30%.

The chain, along with the other major supermarkets, is being squeezed between high-end and discount retailers.

In the 12 weeks to 14 September 2014, according to the latest figures from research firm Kantar Worldpanel, Morrisons had a share of 10.9% of the UK grocery market, down from 11.1% in the same period a year earlier.

This is the first time Morrisons has introduced a loyalty card scheme or price matching. Asda, which only price matches, is now the only one of the big four supermarkets that does not do both.

Morrisons has been struggling for a number of years, whereas Tesco's and Sainsbury's woes are more recent.

"This latest throw of the dice is not going to provide salvation, but it will up the ante a bit," Stephen Springham from Planet Retail told the BBC.

Tesco was the first big supermarket to introduce a loyalty card scheme to UK shoppers in the 1990s. It is now the biggest such scheme in the country but, as Rahul Sharma at Neev Capital points out, "it's not working out too well for them at the moment".

Matching the discounters

Chief executive Dalton Philips described Match & More as "the most comprehensive price match and points scheme in the UK".

"Because it price matches the discounters, the Match & More card will provide the ultimate guarantee about Morrisons' value for money."

Under the scheme, Morrisons' prices will be checked electronically against a database of thousands of prices, as compiled by independent pricing experts Profitero.

Comparable products will be price-matched against those found on the shelves of the five rival chains.

"If your comparable shop would have been cheaper elsewhere, we will give you the difference in points on your card," Morrisons said.

"For example, if Lidl is the cheapest and is 60 pence cheaper than Morrisons, then 600 points are added to your Match & More account."

Points will also be offered on hundreds of individual products throughout the shop, as well as petrol. Customers will receive a £5 voucher for every 5,000 points accumulated.

The scheme will be rolled out in stages across the UK starting on Friday. It will be nationwide before Christmas.

Analysis: Emma Simpson, business correspondent, BBC News

This is an eye catching move by Morrisons to try to win back shoppers and reverse its decline in sales.

Can it afford it and will it work? Morrisons declined to say how much this programme would cost, saying only that it was being funded out of the £1bn of investment into price cuts and other activities it's already announced to revitalise its business, with £300m of it being spent this year.

Morrisons says the scheme will include branded, own branded and fresh food produce. But, as ever, the devil is in the detail. Aldi and Lidl stock very few branded items and it may prove tricky to compare some like-for-like items. As one analyst pointed out today, price matching may have the effect of showing existing customers how much cheaper the discounters are.

Morrisons insist they have already been closing the gap and that they are just as competitive, if not cheaper, on some products. Chief executive Dalton Philips believes Match & More will be a "gamechanger". In the end, the customer will decide if this scheme is a hit, or whether it's just too complex to use.

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