The supermarket landscape is radically shifting according to the bosses of Morrisons and Tesco, who both today revealed customers were steering clear of big, out-of-town stores, preferring to order online and favouring discounters Aldi and Lidl more than ever.
It means both saw sales over Christmas fall, with Morrisons revealing a particularly bad slump, down 5.6 per cent in the six weeks to January 5 on a like-for-like basis compared with a year earlier.
Morrisons, the UK’s fourth-biggest supermarket, surprised the City today by releasing its results 11 days early following a board meeting yesterday where it was agreed sales were far worse than expected.
Chief executive Dalton Philips said: “I was disappointed with the sales performance but we are under-represented in key areas.
“We are going as fast as we can, but this year customers were shopping online and through convenience stores.”
Morrisons opened its first convenience stores last year and only recently launched its website after previous boss Marc Bolland — the current Marks & Spencer chief executive — refused to offer online deliveries.
The company’s shares plunged 14.9p, 5.9 per cent, to 239.2p as the company also revealed that full-year, underlying profits — which exclude one-off costs such as the website — will be at the lower end of expectations.
Previously, profits were expected to hit around £812 million, but they will be nearer to £783 million, the company said.
Over at Tesco, the UK’s biggest supermarket admitted its larger stores had suffered as overall sales fell 2.4 per cent for the six weeks to January 4 on a like-for-like basis compared with a year earlier.
Chief executive Phil Clarke said: “Customers can order at home on the sofa from their laptop, phone or tablet. That’s why we’ve got to reinvest in that format and why we are introducing things like Giraffe restaurants and Harris and Hoole cafes.”
General merchandise has been particularly difficult for the supermarket as it attempts to shift away from big-ticket items like TVs and focus on smaller goods like cookery and homeware.