Morrisons CEO David Potts

Morrisons has been at a disadvantage fighting food price inflation because of its vertically integrated supply chain, CEO David Potts has claimed.

Owning a large chunk of its production meant it had been “harder to keep prices down”, said Potts. “In a way you are negotiating with yourself.”

A lack of competitiveness on price was a key reason for a 4.2% fall in like-for-like sales in the 52 weeks ending 30 October 2022, he acknowledged, though adjusted EBITDA of £828m was also at the top end of Q3 guidance.

But the Morrisons boss said its recent wave of price cuts was turning the tide, and that Morrisons would be first to benefit as and when prices fall.

Supplier CPI requests have dominated the start of 2023, and Potts described a “continuing sense of uncertainty” because of the cost of living crisis and the war in the Ukraine but said sales were on a “steadily improving trend” over the past two quarters.

Sales in the three weeks before Christmas were up 2.5% on last year.

And the momentum would continue as it had “turned up the gas” on its competitiveness, as witnessed by this week’s latest price cuts.

On Monday, Morrisons cut the price of 820 products, including meat, fruit & veg and confectionery lines. It has also cut the price of household products such as kitchen roll, with the cuts overall averaging 20%.

Potts also claimed its Savers range was more competitive than ever, after price cuts on 130 lines at the end of 2022.

“We are having robust conversations with own-label suppliers as well as brands about CPI requests,” said Potts. “In a cost of living crisis discussions are more robust and so they should be.”

Potts vowed Morrisons would not take the axe to its Market Street counters, which he said were a key differentiator, and would be looking to increase staffing hours rather than cut back.

However, it has earmarked £500m of savings from efficiency moves, to include range reductions and more self-scan checkouts.