Can price-matching take price off the table?

By Keith Anderson, VP, Strategy & Insight, Profitero

OCTOBER 6, 2014

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In a market facing record-low growth of 0.3 percent, according to data from Kantar Worldpanel, UK grocers are in an all-out price war.

Now Morrisons, one of the UK's "big four" grocers, will match not only traditional competitors on price, but also prices of Aldi and Lidl, the fast-growing discounters rapidly gaining share.

Called "Match and More," the program compares regular and promoted prices using data from Profitero. Participating shoppers will automatically accrue points when products are found to be cheaper elsewhere; shoppers receive a £5 voucher when 5,000 points have been accrued.

The move follows Morrisons' March announcement of plans to invest £1 billion in more competitive pricing.

According to Kantar Worldpanel, for the 12 weeks ending September 14, 2014, Aldi sales increased 29.1 percent year-over-year, while Lidl sales increased 17.7 percent. Together, Aldi and Lidl account for 8.3 percent of the market, up from 6.7 percent a year ago. Morrisons, Tesco, and Sainsbury shares declined in the same period.

"We are not and will not become a discounter," Dalton Philips, Morrisons CEO, told The Telegraph.

"The discounters are growing fast, but they have one thing: price. Match & More is about neutralizing on price, so that the rest of our offer will really shine through."

Aldi has already responded, telling the publication, "We won't be beaten on price and remain committed to offering our customers the lowest priced, highest quality groceries in the UK, every time they shop at Aldi."

Comparing prices between the chains can be a tricky exercise, considering that a majority of Aldi's and Lidl's assortments are private label. Morrison's program will cover both branded and own-branded products, with the discounters' own-brand products matched to Morrison's mid-tier own label products.

The initiative bears some similarity to Savings Catcher, a price match program that Walmartrolled out nationally in the U.S. earlier this year where the growth of discounters like Dollar General and Aldi also outpaces the market. According to Walmart, Savings Catcher has returned more than $2 million to Walmart shoppers and is beginning to yield shopper insights.