Morrisons - comment
Morrisons becoming the cheapest supermarket for a full trolly shop reflects the determination to shore up market share by investing in price support. A £500m programme is underway, paid for with sales and leaseback (S&L) cash. Cap rates for the S&L deals are around 7%, a lot cheaper than bank or bond debt. In addition, Morrisons is also rolling out budget items to its convenience stores. Whilst adding lower-priced products will lower the gross margin pickup in the convenience store business, it reflects the market share strategy adopted by management.