Morrisons takes on the budget players: price-matching Aldi and Lidl

In the great supermarket price war, Morrisons has made the boldest move yet: from today it has pledged to match the prices at Aldi and Lidl.

The price match will work through a new Morrisons loyalty card called Match & More. If you spend more than £15 and scan your card at the till, if your shopping comes in as more expensive than Asda, Tesco, Sainsbury's, Aldi or Lidl, it will put points onto the card.

These points basically equate to a refund of the difference, because shoppers will get 10 points for every penny that Morrisons is more expensive, and when they have 5,000 points they will receive a £5 voucher.

The system will compare the discounters with the Morrisons own-label mid-range brands. The card will also award separate points for fuel and selected products on promotion. However, in the convenience stores, only certain items in the baskets will be price matched.

The scheme has been launched at 11 stores, and will be rolled out across the country by Christmas.
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Why?
The pledge is set to cost the struggling supermarket £300 million, and it's a sign of just how desperate Morrisons is to turn things around. Its latest half-year figures showed profits slashed in half to £181 million, as shoppers deserted them for the discounters.

Earlier this year it cut prices of some of the basics like bread and milk to match the discounters, but this new move has taken the price match to a whole new level.

In launching the deal Morrisons boss Dalton Philips said that at the moment half of its customers also go into Aldi and Lidl to find the best deals. He said breaking the midweek shop up and getting bits and pieces from all over the place is saving shoppers money but costing them time. In launching the card he said he is saving them the bother of going elsewhere.

The idea is to match the discounters on price so that shoppers choose their supermarket based on the experience instead. Morrisons, Philips said, has more to offer in terms of specialist bakers, fishmongers and butchers, as well as a focus on customer service.

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What does it mean for shoppers?
The stockmarket reacted extremely badly to the news when it first emerged yesterday. The combined market value of the major supermarket retailers fell a total of £3 billion in reaction.

However, it may not necessarily be a bad sign for shoppers. The investors are worried that this move will prompt the other major players to take on the discounters, and as a result they will make lower profits and return less in dividends to the shareholders.

For shoppers this translates as lower prices across the board. The only concern is that this could go so far that one or more of the major players could find themselves in serious financial trouble.

The scheme was quickly dismissed by the discounters. Aldi's joint managing director of corporate buying Giles Hurley said in a statement: "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. Our shoppers do not have to spend months racking-up points via a card scheme to eventually redeem a reward. They make real savings at the check-out every time they visit Aldi as their shopping costs less than at the other supermarkets."

In a statement Lidl added: "We welcome a competitive retail market and remain committed to giving our customers the highest quality products at the lowest possible prices."

But what do you think? Will it make you more likely to shop at Morrisons?

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