Morrisons Faces Challenges Amid Cyberattack and Intensifying Price Wars

The ongoing struggle at Morrisons has been exacerbated by a recent cyberattack that disrupted operations and product availability. The company, the UK’s fifth-largest supermarket, is grappling with significant competition in a sector characterised by razor-thin margins and fierce rivalries. Following a ransomware incident at Blue Yonder, the firm has seen a notable decline in sales growth.

During the three months to January, Morrisons reported like-for-like sales growth of just 2.1 per cent, a stark contrast to the previous quarter’s growth of 4.9 per cent. Total sales for the period reached £4 billion, yet the loyalty card programme, a crucial aspect of customer retention, reported a record 78 per cent transaction rate, indicating a potential but precarious customer base.

The chief executive, Rami Baitiéh, attributed the recent slowdown in sales to the continuing impact of the cyberattack, stating that the disruption affected stock accuracy, availability, waste management, and overall forecasting. As the market heats up, Morrisons is attempting to regain its footing amidst a resurgence in price wars among major rivals.

With Asda recently vowing to lower prices, Morrisons has accelerated its cost-cutting measures, resulting in the closure of various in-store operations and a focus on enhancing product availability and price competitiveness. The supermarket has already saved £668 million since embarking on its restructuring programme and is now aiming to double its cost-cutting targets in response to mounting pressures.

As part of its strategy, Morrisons is also addressing its significant debt, which soared to £6.6 billion during its acquisition by Clayton, Dubilier & Rice in 2021. The firm has successfully reduced its debt to approximately £3 billion. Baitiéh remains optimistic, asserting that despite challenges, Morrisons has made substantial progress, driven by the dedication of its staff across the UK.

The supermarket’s ability to compete hinges on its agility to adapt to an evolving landscape marked by budget-conscious consumers increasingly gravitating towards discount retailers. As such, Morrisons must continue to innovate and respond decisively to the pressures of a fiercely competitive environment.