Morrisons’ innovate: How will other supermarkets react?

This article uncovers some of the current challenges and changes in the UK’s oligopolistic supermarket industry, following the recent milk-induced price war. Whilst the ‘big four’ of Tesco, Sainsbury, Asda and Morrisons are in direct competition, there is huge interdependence between them, which translates into a high level of reactivity where changes in pricing can lead to these all-out price wars. Image source: www.thisismoney.co.uk

Morrisons, the smallest of the four giants, has recently differentiated by opening an ‘innovations’ store. In the new concept store, they have reduced their number of product lines and now claim to provide 100% product availability due to a type of ‘just-in-time’ stock top-up system that utilises a ‘chilled corridor’ supplying each aisle. They also offer the opportunity for consumers to benefit from economies of scale through bulk buying… and now, Morrisons claim to sell the UK’s cheapest milk, following Tesco’s move to slash prices.

Morrisons are marching on and their innovations are part of a wider strategy to lower prices on all their core ranges to try and gain market share. Some might say it is about time they caught up; Morrisons only introduced their online shopping facility in January 2014.

The question now is: "with all the cost cutting and innovations, how will the top three react?”