Why are the supermarkets cutting their prices now?
Supermarkets are at war because a huge American company, Wal-Mart has bought the fourth supermarket on the high street in terms of size – Asda. Because of its huge size it can bargain suppliers down and therefore reduce its prices to a point where the other players – Tesco, Sainsbury and Safeway – cannot compete. This is why prices are coming down at the moment. Is the competition affecting all products or only foods? Initially it’s mainly food – but as Wal-Mart sells all sorts of goods in the United States it is possible that it may affect a wider variety of retailers. Drugs and pharmaceuticals have been dragged into the fray already, so the price war will affect the likes of Boots. It’s all very confusing – what’s the latest position of each of the main supermarket chains? The recent bout began a week ago when Asda (with Wal-Mart’s backing) announced it would cut 10,000 items by between 5 and 10%. On Saturday Sainsbury joined in and promised to match 1,500 goods at the lowest price a
