Some good news among the financial gloom!
We are going to able to save some money on our food bills.
This because a rice war has broken out between the UK's largest supermarkets as a flurry of discount offers designed to attract cash-strapped consumers is announced.
Tesco will reduce the price of 3,000 items by up to 50% from today in an attempt to win back those of us struggling to cope with record petrol prices and utility bills.
On Friday Asda was helping customers to "fight back against inflation" with price cuts to 10 staple items. A customer buying the whole range of goods in one of Asda's 329 stores would see their shopping bill reduced from £10.83 to £5.83. That’s 30% less than you would have paid for the same goods 12 months ago.
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 big discounters such as Aldi and Lidl head on.
(However, the ‘quality’ of 2p sausages is certainly up for debate!)
- Discount supermarkets doing well
Aldi, the German-owned discount chain, has seen a 20% per cent rise in sales over the past month; the fastest growth rate in Britain. The number of shoppers visiting its 400 stores has gone up by 35% in the last 3 months.
Meanwhile, Iceland has seen a 15% rise in sales (that is Iceland the frozen food chain, rather than Iceland the puffin eating country). Marks & Spencer, meanwhile, has seen a 3.2% fall in takings in its food halls in the past month.
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.
The supermarkets are having to reduce their prices despite soaring costs because as we all become a bit more cash strapped, we are cutting back on our weekly shopping so we can afford higher electricity and gas charges, motoring cost and mortgages.
The credit crunch has seen an unprecedented sales boom at budget supermarkets such as Aldi and Lidl.
Meanwhile, the biggest supermarket name, 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.
Tesco pockets nearly £1 of every £7 we spend on the high streets and has more financial muscle than anyone else. 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.
Because of the credit crunch, nearly 30% of the goods in the big four supermarkets are on special offer now; up from 20% a year ago.
We have all been seeing our grocery bills rocket in the last year as higher commodity costs push up the price of wheat and rice. National Statistics now believe that food price inflation is running at close to 9%. 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 (which is daft thing to claim!)
MySupermarket.co.UK claims that a typical family faces a £1,000 rise in the amount it spends in supermarkets over the next 12 months. Its last survey suggested the cost of a typical family shop had risen by 21% over the past year to £120.
The director of mySupermarket, Johnny Stern, said supermarkets were offering other price cuts alongside their special offers:
"We can see that supermarkets are making a significant effort to help consumers combat the credit crunch by reducing prices on many items."
The move to value shopping has been striking, with Aldi reporting a year-on-year sales growth of 21% and Sainsbury's reporting a 300% increase in sales of some of its Basics range of products.
Meanwhile, in something that doesn’t come as a complete surprise, sales in organic products have now slowed.
By the way, can anyone tell us why good healthy organic stuff costs so much more than all the stuff with pesticides in?
- Pricing war now in full effect
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; it seems that now they are left with no alternative if they want to get us through their doors.
Aldi, (which claims to be at least 20% 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.”
So, is the price battle about supermarkets trying to help us in our time of need, or are they just desperate to keep their customer base?
What do you think?