Supermarket price war to begin this weekend

22 September 2011

There's war on the horizon in the supermarket world and it's great news for customers.

Rumours are circulating that Tesco is going to start a price war this weekend with a "dramatic new offensive" on discounts, says retail industry magazine The Grocer.

Store managers are being briefed and all leave has been cancelled for this weekend so that sufficient staff are on hand to help re-price goods and put up new promotional banners.

All change

Tesco is believed to be planning to abandon its traditional three-for-two deals and short-term offers in favour of simple, long-term price cuts. "Price cutting is usually a smoke and mirrors affair. But I think this will cut through the fog of promotions and concentrate on very low pricing," says Philip Dorgan, at broker Panmure Gordon.

"Most consumers don't want four for the price of three, because they don't want four packets of whatever. They just want it cheaply. This should put Tesco on the front foot."

The move would put significant pressure on the other supermarkets that are running price-match promises. At the moment, Asda promises to be 10% cheaper than rivals on a basket of groceries and Ocado matches a lot of its own-brand goods to Tesco.

Tesco has lost market share to the budget supermarkets in recent months as customers struggle to beat rising prices, and it is well-known that new chief executive Phil Clarke is keen to win back customers from the likes of Aldi and Lidl.

So keep an eye out, Monday could see the outbreak of a price war.

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