price wars

2014 is turning into a difficult year for the “big four” supermarkets: Tesco, Asda, Sainsbury’s and Wm Morrisons. For the first time in a generation, the grocery chains are losing market share amid fierce competition and price wars. With Tesco confirming the Financial Conduct Authority is investigating its accounts after it revealed it had discovered a £250 million black hole in its profit forecast; Sainsbury’s has revealed like-for-like sales, excluding fuel, in the three months to the end of September 2014 fell 2.8%. Chief executive Mike Coupe blamed short-term competition for “deflation in many areas of our business…Sainsbury’s has already lowered prices on essential food items in an effort to compete with rivals including Asda as well as discounters Lidl and Aldi…Clearly in the last few months the pace of change in our industry [has meant it] has changed beyond all recognition…Customers are shopping very differently to the way they were shopping even a year ago. So we are seeing an increase in the number of outlets available to them and they are shopping much more frequently and little and often shopping so these trends are changing very rapidly.” In a challenging market – and with the industry exhibiting ex-growth – what should the supermarkets do? Launch more convenience stores for customers shopping more regularly but putting less in their basket? Launch a discount chain to compete with grocers that are increasing their share of this segment of the market?