WM Morrison Supermarkets PLC (LON:MRW) announced it is cutting prices by an average of 23% on 400 products as of Monday.
It will include fresh food, store cupboard staples and cleaning.
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The move comes after Walmart Inc’s Asda announced on Friday the ‘Asda Price’ campaign, investing £100mln to lower prices on thousands of own label and branded products across food, baby and toys.
It is also bringing back its famous ‘pocket tap’ in an advert promoting the new discounts.
Both companies said they are looking to support customers who took a hit to their finances during the pandemic.
House broker Shore Capital noted that in the 2008 financial crisis the big grocers did not engage in such initiatives, leaving market share to German discounters Aldi and Lidl.
The current offer “reflects a business that is in-tune with its customers” who may be struggling financially.
“The British supermarkets have shown their importance and worth as strategic assets – a key industry with key workers – and, we believe, have they have also earned new respect and re-found relevance, which should feed into investor sentiment to us,” analysts commented.
“With previously unforeseen demand benefits coming through alongside prevailing cost control and capital discipline, we believe that the current equity ratings for J. Sainsbury, Tesco and Wm. Morrison Supermarkets, undervalue their current value and financial prospects,” they continued.
“Hence, in the face of recession and talk of price wars, switched on supermarkets, like Morrisons, are doing the right things and we reiterate our ‘overweight’ stance on the sector.”
Shares in Morrisons were trading 1% higher at 191.85p on Monday after lunch.