Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200806/20080628/article_364847.htm
UK supermarkets cut prices to attract cash-strapped customers
Created: 2008-6-28 9:05:41
Author:Paul Jarvis
TESCO Plc, UK's biggest supermarket chain, and nearest rival Asda said they have cut prices further as grocery retailers battle for business from customers struggling with higher mortgage, energy and food bills.
Cheshunt, England-based Tesco reduced prices on 5,000 items this week and will cut 3,000 more from June 30, spokesman Trevor Datson said yesterday in an e-mail. Asda, a unit of Wal-Mart Stores Inc, lowered the price of 10 top-selling products including bread and eggs for three days from yesterday in a promotion which it says will slash the cost of a basket of shopping by 54 percent.
Price competition between supermarkets has intensified as higher living expenses leave consumers with less money to spend. J Sainsbury Plc, the third-largest UK supermarket chain, last week reported slower first-quarter sales growth and said it reduced prices, including a 25-percent discount on wine, Bloomberg News said.
"This price competition has to mean there's going to be some erosion of their margin," said Stephen Pope, chief global market strategist at Cantor Fitzgerald in London. Tesco "doesn't want there to be a drift down the scale" by customers to discount food chains such as Germany's Lidl and Aldi Group."
Tesco's price cuts include tissues, breakfast cereals and cheese spreads, according to a two-page advertisement in yesterday's Daily Mail newspaper. The ad compares prices with those of Asda.
Bananas, potatoes and pork sausages are included in Asda's promotion, which the retailer says reduces the cost of a basket of goods that normally costs 10.83 pounds (US$21.54) to 5 pounds. All the foods included in Asda's offer will be sold for 50 pence each, the retailer said.
Tesco will also give customers who spend at least 50 pounds at its stores a reduction of 5 pence per liter on gasoline purchases, Datson said.
Cheshunt, England-based Tesco reduced prices on 5,000 items this week and will cut 3,000 more from June 30, spokesman Trevor Datson said yesterday in an e-mail. Asda, a unit of Wal-Mart Stores Inc, lowered the price of 10 top-selling products including bread and eggs for three days from yesterday in a promotion which it says will slash the cost of a basket of shopping by 54 percent.
Price competition between supermarkets has intensified as higher living expenses leave consumers with less money to spend. J Sainsbury Plc, the third-largest UK supermarket chain, last week reported slower first-quarter sales growth and said it reduced prices, including a 25-percent discount on wine, Bloomberg News said.
"This price competition has to mean there's going to be some erosion of their margin," said Stephen Pope, chief global market strategist at Cantor Fitzgerald in London. Tesco "doesn't want there to be a drift down the scale" by customers to discount food chains such as Germany's Lidl and Aldi Group."
Tesco's price cuts include tissues, breakfast cereals and cheese spreads, according to a two-page advertisement in yesterday's Daily Mail newspaper. The ad compares prices with those of Asda.
Bananas, potatoes and pork sausages are included in Asda's promotion, which the retailer says reduces the cost of a basket of goods that normally costs 10.83 pounds (US$21.54) to 5 pounds. All the foods included in Asda's offer will be sold for 50 pence each, the retailer said.
Tesco will also give customers who spend at least 50 pounds at its stores a reduction of 5 pence per liter on gasoline purchases, Datson said.
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