Competitors of supermarket giant Tesco have rejected claims that the grocer’s Big Price Drop will lead to a price war, as the company reduces prices on up to 3,000 of its products from today.
The retailer claims that its investment of £500 million was made in response to customers’ needs during this time of financial difficulty, but this has been greeted with outrage and cynicism by competitors.
Sainsbury’s claimed that its own price match policy had left Tesco with no choice but to make changes and said that the much-publicised £500 million investment was misleading.
Tom Parker, a spokesperson for Sainsbury’s, told Retail Gazette: “Tesco is scrapping Clubcard 2, thereby saving £350 million, so really this represents a new money price tag of £150 million.
“This isn’t a huge change but part of the cut and thrust of retail as usual - we will always remain competitive, that is the key thing for us.”
Another spokesman for Sainsbury’s last week described the move by Tesco as “classic smoke and mirrors”, saying that the UK’s largest retailer was “giving with one hand and taking with the other”.
“It is no surprise to us that Sainsbury’s price match policy, together with a stronger own brand offer, has forced Tesco to take this kind of action,” they added.
Last week, Sainsbury’s launched its ‘Live Well for Less’ campaign, aimed at encouraging healthy eating while maintaining low prices.
Parker was quick to point to the lengthy research process involved prior to launching this programme.
“Our campaign has been borne out of a year or so of dialogue from customers,” he explained.
“I believe it is resonating. There has been an overwhelmingly positive response on Twitter, which is a useful way to gauge customer reactions.
“This campaign is about reaffirming our commitment to customers.”
While Morrisons, which is the fastest growing ‘big four’ grocer according to the latest Kantar Worldpanel, refused to comment on the business of others, Tesco’s closest rival in terms of market share Asda hit out against the much-lauded price-war.
A spokesman for the grocer attacked the Tesco launch, explaining that it would have no effect on the Asda Price Guarantee, which promises that prices at Asda will be lower than any other competitor.
“No amount of spin can change the fact our price guarantee ended price wars,” said the spokesman.
“No ifs, no buts, no fine print – we offer ten per cent better value than our rivals on a comparable grocery shop or a voucher to make it so.
“Others can huff and puff as much as they like – shoppers want savings not spin; pounds in their pockets, not points on plastic.”