Price hikes a “collective mistake” admits Morrisons’ Andrew Higginson

CHAIRMAN of grocer Morrisons has admitted that the Big Four became complacent and thought they could get away with price hikes – until consumers decided otherwise.

Andrew Higginson said: “I think the supermarkets collectively have believed they didn’t have to be any cheaper on price, that they could charge a little bit more – and that was a collective mistake, if you like, and Morrisons was no different to any of the others in losing its way on that.”

“The supermarkets got seduced into this idea of widening margins during a recession and that meant putting up prices and customers twigged that and voted with their feet” he told the BBC.

This admission comes as new chief executive David Potts starts a new strategy to reverse a large fall in profits and change the image of the supermarket.

It is Britain’s fourth largest supermarket chain, employing 125,000 people with 11 million customers a week.

But Morrisons has been hit hard, its profits halved last year making a loss of nearly £800m, reaching the lowest level of profitability for eight years, falling behind rivals Asda and Tesco as well as discounters Aldi and Lidl.

Loyalty cards, online shopping and convenience stores were brought in after the retirement of Sir Ken Morrison in 2008, but the grocer was already way behind competitors in terms of modernisation and innovation.

The company also announced £1bn worth of price cuts to entice customers back.

Mr Higginson, who is a former Tesco executive, said: “All the supermarkets have had a difficult few years and perhaps they’ve slightly lost sight of the things they’ve always been very good at which is looking after customers and giving them great prices.

“They are all slightly guilty of looking at each other, you see that in a lot of their advertising, they’ve been talking to each other rather than talking to customers.

“The harsh truth is that our destiny is in our own hands, we have the ability to make this business a winning business for customers and it’s really down to the management now to make sure that happens.”

“The number one priority is to get the stores humming, really get customers to come back in and trade our stores and offer them great Morrisons products at great prices.”

“We’ve got to re-establish trust back in the prices and that’ll take some time and it’s a gradual thing because trust takes a long time to build up and can be wiped out in an instant.”