Supermarkets slash prices for Christmas

 

Tesco, ChristmasBritish supermarkets are slashing prices ahead of Christmas, spurred by competition from German-owned discounters, benefiting customers of all tastes.

Sales events dubbed “Black Friday”, “Cyber Monday”, and “Manic Monday” – imported from the US – surged in popularity across Britain this year as retailers fight for market share both online and in stores.

These provided fresh price battles between British supermarkets as they seek to halt the advance of German discounters Lidl and Aldi and win back belt tightening consumers.

As a result, Britain’s STG110 billion ($A200 billion) annual food sales market fell this autumn for the first time in at least 20 years. Sliding food prices have also contributed a drop in British inflation to 12 year lows.

“Mainstream retailers cutting their prices have been the direct result of the pressure brought about by Aldi and Lidl,” said Fraser McKevitt, head of consumer insight and retail at Kantar Worldpanel.

Launched in Britain in the 1990s, the German discounters have eaten away at the dominance of the four major national supermarket chains – Asda, Morrisons, Sainsbury’s and market leader Tesco – a trend deepened in recent years with the erosion of household buying power.

“The UK supermarket industry has experienced radical change over the past five years with consumers becoming much more focused on value for money,” said Davy Research analyst, John Stokes.

Tesco, the world’s fifth biggest supermarket group by sales according to Deloitte, has seen its share of the grocery business steadily decline over recent years in main market Britain.

It stood at 29.1 per cent at the end of 2014, down from 31.5 per cent at the start of the financial crisis in 2008, according to the latest study by Kantar Worldpanel published on Tuesday.

Although they remain far behind, the market shares of Aldi and Lidl are steadily increasing to 4.9 per cent and 3.7 per cent, respectively.

Against such a backdrop, Tesco has cut its profit forecast four times in 2014.

AFP

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