Britain’s fourth-biggest supermarket, Morrisons, has announced better than expected results in the last quarter (Q3), outperforming its bigger rival, Tesco.

In the 13 weeks to 2 November total sales, excluding fuel, were up by 9.5% (14.9% including fuel). Like-for-like sales excluding fuel increased by 8.1% (13.3% including fuel).

In contrast, Tesco’s overall group sales for the 13 weeks ending 22 November increased by 11.7%, however like-for-like sales were up by just 2% excluding petrol (3.2%, including petrol).

Morrisons said that a combination of its emphasis on fresh food, together with ‘price crunch’ deals on popular items had helped maintain strong performance despite the difficult economic environment.

In reaction to the tougher conditions, Tesco recently introduced a new range of cheaper ‘Discounter’ products, which it said now accounted for over 5% of its UK food and grocery sales.

The supermarket giant said the launch was “the biggest single change to our ranges since Value lines were introduced in 1993” and had helped it deflate prices during the quarter by 2-3%.

Both supermarkets expected the economic environment to remain challenging, but said that a focus on cost control and value would help maintain strong business performance in the future. The question for farmers is, at what cost to suppliers?

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