Supermarket price war set to begin

Supermarkets Tesco and Asda are heading for a savage price cut war as they try to win back customers who have switched to discount retailers.

The discounters – Aldi – have seen custom grow by a reported 20% in the past 12 months as shoppers try to cut back on spending.

Lidl and Farm Foods, over the same period, have recorded a 13% rise in their sales.

A large proportion of that growth has been won at the expense of the two largest supermarkets – Tesco and Asda.

In a move to stem the flow, Tesco has announced it will cut the price of 3000 items by up to 50% on Monday 30 June.

Asda’s response has been to launch a weekend price cutting spree on 10 staple items such as bread and eggs.

The price war could spell trouble for farmers and suppliers, a spokeswoman for food and agricultural lobby group Sustain has said.

In an interview with the BBC the spokeswoman said she was concerned that the big retailers would attempt to maintain profits by reducing prices paid to suppliers. 

“The price war could be very bad news indeed for farmers,” she added.

Meanwhile TV chef Hugh Fearnley-Whittingstall has had his plea for Tesco to improve welfare standards for chicken, rejected.

Mr Whittingstall is a Tesco shareholder and used the annual general meeting to propose that all of the supermarket’s chickens should be reared to RSPCA welfare standards.

But fewer than 10% of his fellow shareholders voted to back the plan at the meeting in Solihull on Friday 27 June.

It was thought that shareholders were put off the plan because the extra cost of rearing birds under higher welfare regimes would further inflate food prices at a time when shoppers were tightening their belts. For the plans to have been passed, Mr Fearnley-Whittingstall needed 75% of shareholders’ votes.

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