Tesco and Wal-Mart-owned Asda, respectively the UK’s number one and number three supermarket chains, will this week announce price cut promotions purporting to tally over £100 million ($161.0m; €153.7m) between them.
Some newspapers are comparing the upcoming battle to the aggressive ‘price war’ in 1999 and, according to the Daily Telegraph, investment bank analysts believe that Tesco alone has reduced prices by £1.2bn over the past five years.
Tesco announced on Monday an £80m price-cutting programme across 1,000 product lines, although it omitted to quantify the value of the price base from which the cuts will be made. Some lines (it didn’t say which or how many) will be cut by over thirty per cent. Nor did it specify whether prices would be increased on other lower-profile lines to compensate for the cuts.
Asda will follow suit, revealing later this week a number of price cuts on its George apparel range. One loss leader will be jeans, retailing at just £6. The new reductions are part of Asda’s Rollback programme which claims to permanently reduce prices (although it too fails to state from what level or for how long).
Whether by accident or design, the concurrence of the two chain’s price attrition programmes executes a neat pincer movement around the nation’s number two supermarketeer, J Sainsbury.
Sainsbury will not be the only large retailer to feel the heat – especially from Asda’s slashing strategy. With sales of about £1 billion, George is the UK's fifth-largest clothing retailer and retail research consultancy Verdict believes that Arcadia, Marks & Spencer, Matalan, and Next could all be affected by Asda's move.
Data sourced from: Telegraph.co.uk; additional content by WARC staff