Tesco is set to launch a 'dramatic' supermarket price war in an attempt to land a blow to its rivals with a move away from one-off discounts in favour of genuinely lower prices across its products, reports have indicated.
A supermarket battle is predicted with Asda, Sainsbury's and Morrisons, while successful budget chains Aldi and Lidl are also in its sights.
Offers: But Tesco's new strategy is to focus on permanently low prices
According to retail industry magazine The Grocer, Tesco is to launch a ‘dramatic new offensive’.
It is thought the chain will switch away from specific price promotions to a new policy of guaranteeing permanently low prices across all products.
The retail giant has lost market share in recent months, suffering especially from Asda’s price promise to be 10 per cent cheaper on a basket of groceries.
The Tesco move would force Asda, which is part of the world’s biggest chain, U.S. firm Wal-Mart, to cut prices or tear up its price promise.
Industry insiders said Tesco will brief store managers about the new campaign over the next few days.
They have been told to cancel any time off booked for this weekend to ensure there are sufficient staff to change shelf prices and dress stores with the price cut banners.
Tesco: The retail giant may face tough times as consumers cut spending
Retail expert Philip Dorgan, of brokers Panmure, said: ‘Market gossip suggests that Tesco is set to launch a significant price offensive next week. It looks like the sector’s big dirty secret is about to reveal itself.’
Seymour Pierce analyst Kate Calvert said: ‘Pricing activity is expected to hot up this weekend. The autumn is traditionally a very competitive time for the food retail sector and the reduction in promotional activity in August seemed to suggest that the industry was building up firepower.’
There are suggestions that Tesco will adopt a countdown strategy, where groups of products will be offered at £5, with others at £4, £3, £2 and £1.
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The ‘big four’ supermarkets have been involved in something of a phoney war on prices in recent years.
All have promoted a number of eye-catching bargains in a bid to give customers the impression they are helping them survive rising food prices.
Despite this, the food giants managed to boost profits and fund an unprecedented expansion drive, opening a huge number of new stores.
Recent research found many staple foods are up by more than 10 per cent in a year while some, such as beef mince, corn flakes and coffee, have leapt by almost a third.
Customers are now buying less food than a year ago, while there has been a huge switch to cheap own-label products and budget chains.
Industry insiders suggest only a major shift in strategy by Tesco will see Britain’s biggest and richest retailer start growing sales again.
Figures published by retail analysts Kantar last week showed that Tesco’s market share fell by 0.4 percentage points to 30.4 per cent. Kantar suggested Tesco would do everything in its power to avoid falling below 30 per cent.
Sources at Asda said they were ‘comfortable’ about any new challenge.
One insider said: ‘As far as we are concerned they can bring it on. We have our price guarantee promise and will still be 10 per cent cheaper.’
A Tesco spokesman said the firm was unable to comment on the speculation.
by Mail online
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