Eijeijei… This Is Your Food

Every Little Helps: Price war in the UK

Food magically becomes more expensive right before Christmas. Or at least, that’s what most of us feel year, after year, after year. Now, Britain’s two largest grocers ASDA and Tesco are up for a price war as ASDA releases plans to make significant price cuts throughout the month of January. Are we customers finally in for some pleasant surprise? First reactions show scepticism.

In a press release from dating from this week, Asda, Britain’s second- largest supermarket operator, said it was making its biggest price “rollback” for a decade, promising cuts across a broad range of products.
It said that throughout January it would lower the price of 3,600 essential products. The price of one in five products would be reduced, Asda said, making this the broadest range of cuts for more than 10 years. (Fresh Plaza, 2010)

Customers will be able to enjoy those cuts for at least six weeks with an average of 13 % in price reduction.

How will those cuts be financed? Are we getting price cuts in bread just to spend more on butter? Apparently not, as ASDA accomplished them by negotiating better prices from suppliers as – well as efficiency saving (I wonder what they mean by that… probably they fired some people?).

Meanwhile Tesco, ASDA’s biggest competitor and famous for their slogan “Tesco: Every Little Helps”, annouced price cuts amounting to £280 million in total. (Financial Times, 2010)

So now we can all be happy, right? I, however, found some very relevent reactions on the homepage of the Times UK which I would like to share with you:

Zappy Corleone wrote:

FYI, on the 23rd of December I noticed that prices at ASDA are 6 to 13 pence higher than the previous day. Honestly I belive that this pricing War is a Scam agreed upon by the Major Supermarkets.

She has a point those, hasn’t she? It’s easy to be generous when you’re just reducing what you’ve increased a two weeks ago. I’m lacking proof for that but c’mon, it’s not that unlikely.

Martin Carter wrote:

Another phoney war in order to get free publicity in the newspapers. We read abot these periodically, but all I ever see is prices going up.

Oh, how right he is! And it works so well! Just consider this blog post as a further ad for the two companies. No, seriously! I mean how many people will read in the news papers “Tesco cuts prices”, “ASDA now cheaper” etc. which will lead to an increase in name recognition and popularity.

I guess we’ll have to stay critical (as always), take the good with the bad, compare prices and trust our own reason.  To me this whole thing simply shows once more that there’s not only black and white out there in the business world.

What’s your view?

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