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Tesco and Asda are to cut the cost of thousands of everyday groceries in a move that threatens to start an all-out supermarket price war.
Tesco, the country’s biggest retailer, will reduce the price of 3,000 items by up to 50 per cent from Monday in an attempt to win back customers struggling to cope with record petrol prices and energy bills.
Asda has promised to sell ten staple items, including bread, eggs and butter, for only 50p from today as part of a campaign that it claims will win over thousands of shoppers from rivals.
Supermarkets are having to reduce prices despite soaring costs because cash-strapped families are cutting back on their weekly shopping to afford higher electricity and gas charges, motoring expenses and mortgages.
The credit crunch has triggered a radical change in the way that Middle England shops for food, with recent figures showing an unprecedented sales boom at budget supermarkets such as Aldi and Lidl.
Aldi, the German-owned discount chain, has experienced a 20 per cent rise in sales over the past four weeks - the fastest growth rate in Britain. The number of shoppers visiting its 400 stores has gone up by a quarter in the past three months. Iceland, the frozen-food supermarket chain, has registered a 15 per cent rise in sales. Marks & Spencer, meanwhile, has suffered a 3.2 per cent fall in takings in its food halls in the past month.
Andy Clarke, Asda’s retail director, said: “It’s going to be a tough year and the retailers that drive value the hardest will win with customers.”
Tesco has already cut more than £400 million from prices this year. Now it is going farther, placing more emphasis on its cheaper, own-label goods. Nearly one third of goods in the big four supermarkets are on special offer now, up from one fifth a year ago.
Tesco pockets nearly £1 in every £7 spent on Britain’s high streets and has more financial muscle than any of its competitors. One retail executive said the retailer had been “arming itself” in recent weeks by trying to wring more money from its suppliers, before a price battle at the checkout.
“The recent Competition Commission inquiry into the sector forced people like Tesco to pull its punches,” he said. “But they have been trying to get as much as they can from suppliers to build a reasonable war chest. With the Competition Commission inquiry out of the way, I think we can expect the heat to go up.”
A Tesco spokeswoman said: “As our customers face tougher times we are doing everything we can to help them make ends meet.”
Grocery bills have rocketed in the past year as higher commodity costs push up the price of wheat and rice. National Statistics believes that food price inflation is running at close to 9 per cent. The high cost of items such as pasta, eggs and cheese has been blamed for Britain’s inflation rate hitting its highest level for nearly 18 years.
MySupermarket.co.uk claims that a typical family faces a £1,000 rise in the amount it spends in supermarkets over the coming year.
Analysts believe that the recent series of price promotions have been little more than skirmishes because supermarkets have feared that a full-blown price-cutting campaign would harm their profits. Now they have no alternative if they want to get families through their doors.
Sainsbury’s started a “Feed Your Family for a Fiver” campaign in March, backed by the celebrity chef Jamie Oliver, while Morrisons cut the price of 2,000 items this month.
Asda has already started selling a 2p sausage - 16p for a packet of eight - and has slashed the price of mince from 96p to 50p. Its 50p promotion is being seen as an attempt to tackle discounters such as Aldi and Lidl head on.
Aldi, which claims to be at least 20 per cent cheaper than the four leading supermarkets, has been trying to poach more Asda shoppers by highlighting wine and olives. Paul Foley, its UK managing director, said: “For those who need a store with piped music, a choice of 42 yoghurts and who can’t pack their own shopping bag, then perhaps Aldi’s not for them. But for those who want a guaranteed quality at low prices, then the current economic climate simply makes Aldi an even more obvious choice.”
Asda’s promotion, which lasts from today until Sunday, includes fresh baked white-bloomer loaves (down from £1.09), 500g seedless green grapes (down from £1.68) and 454g packs of eight Asda own-brand sausages (usually priced at 97p). The ten items included in the deal will cost £5 instead of the normal price of £10.83.
The grocery sector has been one of the few areas of the high street left unscathed by the credit crunch. More than a dozen high street chains have been forced into administration, including Dolcis, the shoe store chain. Sales of furniture and home furnishings have collapsed, with John Lewis reporting a sales decline in all but three of its department stores over the past 20 weeks.
Retail experts are convinced that more high street stores will go to the wall, with predictions that 100,000 jobs could be lost between now and the end of 2009.
Tesco and Asda are both expected to be far more aggressive on price promotions for nonfood products later this year as Sainsbury’s increases its own offers of televisions and washing machines.
DSG International, the electricals retailer that owns Currys and PC World, said yesterday that it would be pressing ahead with plans to cut an estimated 1,000 jobs after a collapse in profits. John Browett, its chief executive, said: “The market is going to be very tough and challenging.”
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If you want to save money, cut down on supermarket visits.
I guarantee that if you go in for say, milk and eggs, you'll come out with a basket full stuff you never intended to get. That's why they are so successful.
sedgwick, London, UK
Before you enjoy the benefits of the price cuts, think who is paying for them - the super markets or their suppliers..... whose margins are being squeezed into extinction. This will end in less choice and higher prices in the long term as more and more suppliers exit the market .
A Mason, London, UK
Buy a pack of 'Lakeland' stayfresh bags in which you can keep fresh fruit , vegetables and salad items fresh for up to a fortnight. alan
alan frankcom, solihull, UK
Buy food that is good enough to eat, buy the right amount of it and you will save money over buying cheap nasty rubbish that gets thrown into the bin or is mouldy before you get round to eating it.
diana, derby,
When will Tesco's reduce the cost of the petrol and really help.......?
Ann King, Bedford,
Why would anyone want to buy a packet of sausages that cost 16p and feed them to their family? Who knows what is in them to make them that cheap or where the meat has come from.
Danielle, London,
To Nikki, London, yes, there is already cheaper bread, but few are willing to eat the 37p bread as, lets face it, it's not very nice! This is the good bread. Of the same standard to your branded bread.
Tom, Crewe,
I went to Tesco today, and the 12p doughnuts were nowhere to be seen. Nor were the 15p crisps.
Malcolm McLean, Bradford, UK
I wouldn't feed a dog a 2p sausage.
Jack Cawley, Harrow,
In 1978 a pint of milk cost 17p today it costs 25p (from Iceland)
I have just bought 1kg pasta 80p, 1kg flour 32p. For these bargains I thank our supermarkets. For the ability to use these things I thank my Granny.
mark, epping, essex
Great News the only way consumers have a voice is through their choice of purchase. Unlike the producers who can afford to pay celebrities vast sums to give their case the right PR.
The outlets are available for the public to choose. The customers will go for value in its roundest terms.
G Creighton, Royton,
If the Giant Supermarkets stopped shipping out of season fruit and veg in from all around the world and selling it at inflationary prices, together with ever "new" lines they keep introducing ,the British public and British producers might just get a fair deal.
Go to Farmers and local town markets
glenda, Herts, uk
It's all well and good these supermarkets reducing the price of "selected items" - usually cola drinks, beer, "junk" food etc, but how about they reduce costs of fresh fruit and veg by selling only British produce? Has anyone tried to buy English apples recently? I don't WANT Chilean apples thanks!
Sheila , Burton upon Trent,
"Asda has already started selling a 2p sausage" that is appaling, the money time and effort that goes into getting a healthy pig from farm to table cannot justify this. Tesco's will not be the ones to suffer, the livestock and farmers will be, besides which what rubbish will they put in it for 2p!!
Max, London,
Most people here seem to realise that this is just a cynical ploy by the supermarkets to protect their profits at the expense of suppliers. Yet still we shop in these ghastly places. Food distribution, like transport and housing, is far too important to be left solely to the market.
Terry Peers, Bridgwater, Somerset
When we started shopping at Lidl's our food and household expenses dropped by 20-30%.
A few years on and we are more trusting of the 'imports' from europe and our variety of food has increased greatly.
We have money left over for the weekly 'extravagences' like Halva, Giant Greek Olives, etc. etc.
J D S, Cardiff, UK
maybe this is why certain supermarkets are saving costs,by making loyal middle management redundant,after years of hard work.two months before christmas,and they claim to have "values"! The only value they understand is the £.
Roger, watford, england
Funny how supermarkets can suddenly afford to do this...
John, Colchester,
In the end I suspect that it is the producer/farmer that bears the brunt of the cut priced goods whether they are excellent British products or infereior imported ones. Shoppers should remember that food produced here is of the highest quality therefore you need less of it so saving money.
Ian Wilson, Newbury,
50p for bread at Asda. They should be giving it away. I never buy bread at Asda because the quality of bread is better elsewhere.
Louis Blanc, Liverpool, UK
Try Tesco's "VALUE" range. Excellent quality in most items at almost giveaway prices. 15 eggs for just over a quid. Blimey, my old hen couldn't lay em for that money. Get your fruit and veg from the street market though. Best value and minimal packaging. Over 2pounds of tomatoes for £1. Roll up...!
Ken, Bedford, Uk
If you can shop shop local do so - you'll save in 2 ways a) you'll not get the vast choice so you'll buy only what you need and b) even the local producer is slightly more expensive (if you use your car) you'll save on petrol/diesel/wear & tear/servicing/tyres.Not to mention environment/congestion.
Paul , Ballyclare, N. Ireland
Tesco and gang should bear the cost of promotions and price reductions not simply pass it on to the suppliers, particularly of own brands who must already be struggling.
Simrit , London,
Asda fruit and Veg has to be the worst on the market. Lucky if it lasts a day before going off. Their other basics aren't too bad, but competition from Aldi etc will certainly keep them on their toes. They only seem to compare against Sainsburys and Tescos.
Norman Pitkin, London, uk
I agree with Sara, what does the future hold for British farmers facing ever increasing costs of production and now having to succumb to the major supermarkets driving prices down. Do these supermarkets really care about the future of British agriculture?!!
James, Oxford,
Compare to Tesco. Every LIDL helps.
Very good, Robert! :)
Steve, Tunbridge Wells, UK
I'm not saying that all should become vegetarian, but we do all eat more meat & fish than we need to. Cut down to having it once or twice a week, grown your own veg, invest in a breadmaker and you'll see your weekly bills drop! It's an awful lot healthier for the nation too. 2p sausages = ILLNESS!
emma, london,
The supermarkets are earning ridiculous profits, when they cut prices the suppliers lose out, maybe it is time we cut the "middle man" and ,as consumers, to go straight to the supplier
lisa, lancashire,
I still prefer to buy some things at Asda because they don't have hydrogenated fat in their products, which are still used in Aldi and Lidl biscuits cakes and pastry items.
Sue , Milnthorpe, England
As a newly qualified doctor with 6 years training and insurmountable debt from university, I will be earning less than a bus driver. I think before you stereotype how the Governments lavishes its public sector workers you should remember that everyone has been hit hard by a falling global economy.
Alison, Birmingham,
Kelly, agreed.
On a Saturday moring, I trail around too.
Farmshop, Market, and local bakers, and like you, I visit a similar store called Home Bargains (great value wine/snacks/toiletries etc) - the Supermarket is last, usually just for a few luxuries.
Never spend more than £80/week for 4!
Louise Hardy, Mirfield,
It's ironic that we are complaining about paying a couple of pence extra for a loaf of bread when the Government takes 40% of everything we earn as a nation. May be we should be asking where has all the money gone, fat cat public sector workers, lazy police, over paid doctors and wasteful PFI.
Bruce Mcaaw, Grantham,
I shall continue to shop at Aldi and Lidl when like-for-like goods are available. Tesco and the other big supermarkets can't compete against the discounters, because the latter's overheads are far smaller. Few shelf stackers, no frills, just selling space. In these harder times it's all we need.
Mike Mitchell, Spalding, England
Ivan Routledge, Stoke on Trent, Staffordshire
My local Asda already has a 37p loaf too.... Maybe it's a different brand/type they are selling for 50p.
Nikki, London,
I have noticed, like Karne Wright, that Tesco put some prices down but others up and regularly change them around probably to confuse customers. If we cut back on supermarket spending consequently eating less the obesity rate may drop, we live longer, costing government more in pensions!!!
Susan James, oxford, uk
It doesnt matter how cheap they make some food items as it doesnt change the quality of the food. If economey sausages are not edible at 50p, making them 16p doenst change the fact that they are simply foul. I find the butcher sells cheaper meat at a much better quality.
Burt Smith, dunthorp,
You dont have to use S/markets at all. Greengrocer, baker & butcher (i know they're harder to find) will give a better deal than any supermarket. Non-consumables goto a poundsaver. You'll have to use your legs a bit but it'll be worth it. It sends a clear message to S/markets & helps local business
Kelly , London, England
I note that supermarket suppliers prices are being sqeezed to pay for these so called bargains. So the farmers etc .become poorer as a result, whilst the supermarket profit margins remain! How magnanimous of them!
Clive Pritchard, Ynysybwl, Wales
I am on a tight budget (Adecco pay me... once every 3 weeks!). I use a price comparisons website to track down deals which I buy in bulk and then store. I often drop in at my local Tesco around 8pm to try and find any marked down items, and the rest of my shopping is done at Aldi (Frikadellen!)
Helen, Bristol,
In view of the latest figures relating to how much food we throw away this new situation will make people take more care with their food choices. It's easy to save lots of money by buying less meat/fish and eating more beans and lentils. we grow lots of our own vegetables and soft fruit.
Roz Kadir, Kingston upon Thames,
with over 14% of Local Government workers earning over fourty thousand pounds a year and working with much less effort than the private sector and with far higher benefits and pensions, its little wonder council taxes will keep rising. I know - I was one of them.
anthony duggins, wirral, cheshire
The rich can afford all, the poor will eat cheap on the dole, ah, but the middle class, there is the rub, they get screwed, as usual, no party is really for them, as the middle class is too busy working , and has no time for political lobbying, the kind that pols of all parties pay attention to.
jim, framingham, USA
Tesco sell a 37p loaf of bread so beats one of ASDA's idea of 50p items straight off. They'll probably attract shoppers who don't think it through but many items mentioned in the article are already cheaper elsewhere if you buy own brand (though i agree with Donna's point). Grow your own if possible
Ivan Routledge, Stoke on Trent, Staffordshire
And what about the farmers and other producers struggling to keep going, after the punitive discounts already demanded by Tesco, etc?
Sara, London,
There is no loss at the supermarket by them promoting heavily. I work for a leading Food and Beveage Company and can tell you that it is the Supplier that foots the bill when their goods go on promotion. We pay for both the feature and the subsidised goods. The Retailer keeps their per unit price !
Anonymous, Gloucester,
Please don't think that the Supermarkets feel sorry for us. What's the betting that their suppliers have to take most of the hit on the reduced prices.
John Reynolds, Kettering, England
good news for shoppers now.. but when the dust has settled there will be fewer small shops and more power in the supermarkets hands who will naturally seek to regain lost profits.... this won't be good news in the long term.
abharrisson, london,
The retailers do not fund the cuts. It is the producers and the farmers which are forced to fund the cuts, so it is their blood that will flow, as is already being seen with the closure (and job losses) of several; ready meals plants.
N, London,
Nothing more than a ploy to get customers through the doors. When they start to guarantee that they will make no more than say 10% profit across the board on the goods they sell, then maybe we could concede they care. Here, this is just a tactic for further profits...
Robert, Tokyo,
Price isn't everything - quality is and I shop where I get the best quality even though it means we may eat less of the higher value items. What on earth are those cheap sausages filled with. Farmers already have virtually not profit margin and we are losing our own production.
Suzanne, St Albans, UK
Let us not forget that supermarkets are there for the profit and their shareholders not the customer. Gimmicky 2p sausages are loss leaders. We will still end up paying more at the till.
Robin, Wakefield,
Profiteering is what the game is all about - exceeding last quarter's profits. They've finally hit the wall, and instead of a friendly game, the big supermarket chains are going to have to cut each-other's throats to stay alive. I say, "Let the corporate blood flow."
George Glasser, Hoyland Nether, UK
I buy all our fruit and vegetables now at a local street market. The quality is far higher than the tasteless produce sold in supermarkets whilst the prices are much, much lower.
Steve Duncan, London,
On Tuesday it was half price fruit and veg day at Lidl in Rusholme: 59p for three peppers, a pineapple 49p, salad potatoes 49p, celery 32p, vine tomatoes 84p/Kg, red grapes £1.09/Kg, punnet cherry tomatoes 29p, double head of broccoli 32p.
Compare to Tesco. Every LIDL helps.
Robert, Manchester, UK
I hate to think what a 2p sausage would consist of! I would rather cut down on other commodities & make economies elsewhere than feed my family something like that. We saw what cheap meat products produced with BSE - if meat products are cheap, it is for a good reason - and probably left well alone.
Donna Walker, Effingham, England
For prices to come down is excellent for the consumer, but will they come down enough? The average shopping bill is going up and up every single week - people can't cope!
Matthew Jones, Newcastle-under-Lyme, United Kingdom
if they can cut 50% either the producer is being severly punished by these giants OR they have been profiteering on their margins for many many years.
neil, Bristol, UK
Just watch Tesco's other prices go up to fund the "cuts"
Karen Wright, Wallasey, UK
ASDA may try to to take on Aldi head on with it's 50P charge for certain items but it will still lose out because the quality of the food at Aldi is much better than ASDA.
Dave, Mold, UK