Supermarket price wars ‘a sham’

The so-called price wars between supermarket chains over the past year have been exposed as a sham by new data from market research company AGB Taylor-Nelson.

The company also says promises of intense price competitiveness between supermarkets leading up to Christmas failed to materialise.

Last year supermarkets, including Asda and Tesco, based their marketing on a low-price strategy leading to claims in the press of a price war. These chains, for instance, each claimed in their ad campaigns to offer the lowest prices on products such as fruit and vegetables in the last quarter.

In a report prepared by AGB exclusively for Marketing Week’s RetailScan, the research company says that supermarket prices rose strongly over the past year with the biggest rises occurring in the second half.

The sharpest increase was in September, when prices rose by six per cent, compared with the same month in the previous year. Inflation was running at between two and three per cent last year, although final figures are not yet available.

AGB says retailers could have reduced prices more at Christmas: “While some increases will be passed on from manufacturer price rises, there was some room for real price reductions – but this opportunity was not taken at Christmas.”

The report says Asda and Safeway have been holding price increases to a lower overall level than rivals Sainsbury’s and Tesco.

RetailScan, page 24

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