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What marketers can learn from the 2014 supermarket price war

By JACKIE BARRIE Published 12th Nov 2014
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Mid-range supermarkets are struggling. In fact, Sainsbury's reported their worst half-year performance in over 10 years.

So what are they doing about it? They've announced a £150m investment in price cuts*.

Read the LBC article.

You probably know how the UK supermarket brands are positioned:

  • M&S and Waitrose (top end)
  • Asda, Morrisons, Sainsbury's and Tesco (big four)
  • Aldi and Lidl (discounters)

Cash-strapped shoppers are rushing to the discount stores. The companies are performing well, and the middle brands are in a race to join them.

As a consumer, you might have noticed that:

  • Tesco issues a £5 voucher to use when you next spend £40
  • Sainsbury's used to price match the other 'big three' but now only Asda (see picture)
  • Morrison's card matches Aldi and Lidl
  • Asda guarantees to pay the difference if they are not 10% cheaper (online claim system)

But a price war might not be the answer.

If you are trying to make a profit in your own business so you can pay your bills, trying to undercut your competitors is not a wise move. No-one wins. Some go out of business altogether (remember Sir Freddie Laker's airline?) and prices return to their original level.

Top tip: Instead of racing to the bottom, reach for the top. Provide better service, higher quality, more perceived value, and classier packaging. Then you can charge more – and keep putting food on the table.

* Investment in cuts – does that sound weird to you?

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160 weeks ago, by Jackie
It's also interesting to note the battle of the 2014 supermarket Christmas ad campaigns – I think Sainsbury's WW1 Truce ad knocks Waitrose's pricey penguins into a cocked hat.

Do you agree?
160 weeks ago, by James
Yes. The Christmas ad battle is fairly cynical manipulation to make money for the supermarkets. Selling stuffed Monty the penguin toys for £95 is just taking the proverbial. They sold out and were being offered on eBay for £500! Christmas spirit. The WWI football story is a favourite of mine, it's been well done, the timing (1914 / 2014) is excellent and it's promoting the Royal British Legion. I think it's the hands down winner.

However, will it help them? The problem seems to be that where shopping at the discounters used to be a potential embarrassment it's now become acceptable and even the shrewd thing to do. That's partly a change of social values (austerity) and partly the very clever way in which Aldi and Lidl have both managed to become know for better quality and better value. I think they've played a very clever game and caught the established brands resting on their laurels. Tough times for them will continue.
160 weeks ago, by Jackie
There's a bit of a backlash against the Sainsbury's ad today, with people claiming it's in poor taste to promote chocolate on the back of so much death and suffering - even if it IS for charity.
160 weeks ago, by James
It seems to be a very difficult wire to walk across this year, more than in previous years. Perhaps there's a lot of bad feeling towards supermarkets.
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