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Is Morrisons’ new loyalty scheme a mistake?

By Fiona Ness on Tue 07 October 2014 in Topical

Following the announcement of their £176 million loss at the beginning of this year, Morrisons have launched a new loyalty scheme.

This comes in a bid to continue their price war against ‘bargain’ supermarkets such as Lidl and Aldi.

Morrisions are clearly re-positioning themselves as a price sensitive supermarket as the loyalty scheme will match the price of shopping not only against the top three supermarkets, Asda, Tesco and Sainsbury’s but also Lidl and Aldi. Including the discount stores in their comparisons is a step ahead that of Tesco and Sainsbury’s, however it has received mixed reviews.

Analysts have already labelled it costly, too complex and not what the customer wants. Although price matching is now common, Morrisons scheme requires customers to build points which they can later spend in store. The question is whether customers even want loyalty cards anymore or are they simply looking for a cheaper deal?

Clive Black from Shore Capital has accused Morrisons scheme of being too complex and notes that Sainsbury’s and Tesco’s loyalty cards are not helping them fight competition –  the concept is already outdated.

Only time will tell whether the Morrisons ‘Match & More’ scheme will rebuild loyalty and help improve their share price, which has seen a reduction of 40% since the price war began. But as with their delayed move online, we can’t help but wonder whether Morrisons have again failed to identify what customers really want – discounted on shelf pricing rather than long term savings.

What can you learn?

It’s clear that Morrisons have invested heavily in attempting to overcome the reported losses from the beginning of the year, however they have made some clear mistakes.

The first being their lack of online presence which we discussed at the beginning of the year. Secondly their new strategy mix of loyalty and price comparison suggests they still don’t really know what customers want.

Given that customers have become far more savvy shoppers, knowing your customer and what they want is therefore key to staying competitive. Utilising information such as buying behavior and patterns is a great starting point to understanding what your customer wants, when they want it and how they want to order from you.