We are now in a the throes of what can accurately be described as a price war, a war that has been falsely claimed numerous times before, largely for the benefit of retailers and lazy journalists.
Now with the effect the discounters have brought to the UK market we are seeing serious and sustained price movement that is closing the gap on the new kids on the block in an attempt to stop the sales erosion.
The battle is however not as one-dimensional as people tend to report and if the big 4 believe that price alone is the cause of their sales demise they are missing the point. Differentiation between the Big 4 offers has been itself ebbing away over the years to the point of largely the same ranges being offered at similar prices and promoted in different cycles of the year.
Service has been hauled in and seen as a hygiene factor rather than a differentiator. Quality or perceived quality remains as a point of difference in fresh lines and own label, although not used as an advertised differentiating tool. We have been presented with arguments on price for the last few years; trying to give customers a reason to stay with them rather than drift to either a Big 4 competitor or, heavens above, a discounter.
Asda has found its price position has been most affected as it has concentrated on price above everything else. Its lack of foresight into its own customer’s needs and the inability to attract a broader demographic has landed Asda at the bottom of the pack in growth. How did Asda become so short-sighted?
Tesco has had more than enough problems on its plate and, instead of concentrating just on price, has recalibrated its supplier relationships and reviewed its range through Project Reset. Price has been a hygiene factor for Tesco, but not the be all and end all. Tesco seem to be on the right track, it’s just a long road for redemption.
Sainsburys has been honest, brutally so. It recognised the sales drift, treated price as a factor but not the differentiator and been very dynamic. Getting into bed with Netto and then buying Argos are moves made from a realisation that the customer has changed and Sainsburys need to change with them. At the same time reformulating its own label has been timely.
Morrisons is again concerned with being price competitive and we are yet to see the other factors or uniqueness it will be bringing in to play to retain and attract new customers. If we see nothing in the next 6 months then Morrisons will be heading down the same dreary path as Asda and frankly its recent operational improvements will mean little.
The benevolent dictatorship that seems to exist in Morrisons is perhaps a way to speed decisions through the business, it just means that you have to get the decisions right in the first place. At present we sit on the fence on this one!