Morrisons has said it plans to cut £700m in costs over the next three years to allow it to reduce prices amid a squeeze on consumer spending. The supermarket group, which reported falls in quarterly sales on the previous year through 2022, said it had eked out a 0.1% increase in same-store sales in the three months to the end of January. Total revenue for the supermarket chain was up 3.4% to £4.7bn. Despite this, the 124-year-old grocer said it would introduce a £700m cost savings programme to “enable further investment in lowering prices”. The company, which has 110,000 employees, did not state where the savings would be made but sources said they would come not from cutting jobs or closing stores but through changes to its back office and logistics practices. Morrisons has struggled after a bidding war ended with the US private equity firm Clayton, Dubilier & Rice (CD&R) taking it over for £7bn in October 2021. It has faced food shortages, rising prices and a squeeze on consumer spending during the cost of living crisis. Concerns have been raised over the direction of the group under its new ownership. Earlier this year, the banks that supported the deal to buy Morrisons offloaded €500m (£440m) of debt at a steep discount, making a loss on their investment. David Potts, the chief executive of Morrisons, said there was “plenty of work to do” but momentum was building, with an “improving trajectory over the last three quarters”. Potts said market share had stabilised and its inflation rates were below peers’. He added: “We have targeted £700m of cost savings over the next three years. This saving will help drive the performance of the business by enabling further investment in our loyalty programme, increasing the pace of [the convenience store chain] McColl’s conversions, putting more hours into our stores, as well as mitigating the significant cost headwinds that we face.” Morrisons now makes up 8.8% of the UK’s grocery market, down from 9.5% a year ago, figures from the research firm Kantar show. Aldi, which overtook Morrisons to become the UK’s fourth biggest supermarket last year, makes up 9.9% of all grocery sales, up from 8.6% a year ago. In the year ending 30 October, Morrisons slumped to a pre-tax loss of £33m. Potts said: “Although this has been another difficult period for consumers with inflation still at very high levels, we have continued with our programme of regular and meaningful price investments, enabled by a strong start to our cost savings programme.”