Morrisons increased its sales by 9.4% in the 12 weeks to 10 August, a faster rate than Tesco (6.5%), Asda (8.5%), Sainsbury's (5.3%) and Waitrose (4%), according to TNS Worldpanel. Morrisons has also increased its market share from 10.9% to 11.1%, at a time when the shares of Tesco, Sainsbury's and Waitrose have dipped slightly.
Ed Garner, director of research at TNS, said: ‘At present the overwhelming factor behind market share is price and budget retailers are benefiting.'
Other supermarkets that have grown ahead of the market include Asda, Aldi, Lidl and Iceland. Their success has been driven by shoppers switching to cheaper supermarkets, rather than an increase in spending by their existing customers.
Morrisons appears to be the more palatable choice for belt-tightening consumers who are more used to the ambience of Waitrose or Sainsbury's.
It has benefited from the introduction of celebrity advertising, which has improved its image as a retailer of fresh and quality products. Its Christmas ads, featuring Lulu, drew an extra 4m customers into Morrisons stores. The retailer's performance in Marketing's weekly Adwatch poll, which asks 1000 adults which TV ads they recall seeing, began to improve in the last quarter of 2007 and has accelerated this year.
In the 27 weeks since mid-February, Morrisons' TV commercials, created by DLKW, have appeared in the Adwatch top 20 ranking 20 times, 16 of them in the top 10. Its ad featuring Top Gear's Richard Hammond was number one in the 20 August Adwatch with a 64% recall. By comparison, Tesco has appeared 17 times in the top 20, Asda 22, Sainsbury's 15 and Waitrose only once.
‘At the moment, Morrisons running two brands alongside each other,' said Garner. ‘Promoting its value products with Alan Hansen's Half Price or Better ads and emphasising their quality with Denise Van Outen's Fresh Choice for You ads.'
If some consumers are trading down, Morrisons has been trading up its offering to appeal to upmarket shoppers. In the past year, Morrisons has added 4000 organic, healthy and top-end products to its range.
Garner believes that the dual strategy means that when consumers are less worried about the economy they will continue to shop at Morrisons, a shift he thinks other budget supermarkets could be more vulnerable to.
‘Aldi and Lidl are very cheap, but shopping at them is a rather dour experience and the product range is limited,' he said. ‘When the pennies aren't as tight, people might not be so single-minded about getting a bargain.'
To appeal further to shoppers' goodwill, in May Morrisons took a leaf out of Marks & Spencer's book and launched its first consumer-facing corporate social responsibility programme, called Today. The campaign is intended to communicate the retailer's ethical stance in a ‘straight-talking and down to earth' way. The policy includes targets for reducing packaging, energy use and carbon emissions.
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