Will there be a Covid test price war on the high street?

Boots and Superdrug have been quick to step into selling Covid tests as the government reveals it is scrapping free testing. Will rivals get in the game and undercut them? Retail Gazette finds out

lateral flow test

A Covid test price war is underway on the high street as retailers rush to add lateral flow kits to their inventory ahead of free government testing ending on 1 April.

With Covid tests in high demand – nearly five million tests were reported in the weeks to 24 February, according to official government data, with many more going unreported – it is unsurprising why retailers want to be the place shoppers go to buy their Covid tests.

Boots was first to enter the market, and revealed on Tuesday, the day after Boris Johnson announced the end of free testing, that it would start selling Covid-19 lateral flow tests the very next day.

lateral flow test

The high street stalwart may have been first to the market, however, it’s pricing of the tests left many consumers baulking. A single test costs £5.99 online, or £17 for a pack of four, while tests in stores will be available from early March, priced at £2.50 for a single test and £12 for a pack of five.

Rival Superdrug was quick to undercut Boots and will sell a single lateral flow tests for £1.99 and a pack of five for £9.79.

Other retailers have yet to reveal whether they will start selling Covid tests but it is expected many will make the move.

But should retailers be making money from Covid tests?

Retail and shopper consultant at Shopfloor Insights Bryan Roberts says it is only right for retailers to charge for this high-demand product.

“Retailers have suffered huge costs in the past year and should charge for the tests. They have a duty to shareholders to maximise their profits,” he says.

However, there has been a backlash against Boots for its Covid test pricing.

Dan Shears, national health and safety director at the GMB union, said: “This is rampant profiteering at the expense of working people. Almost £6 per test is a huge sacrifice for the lowest paid workers, and, if they wish to test family members as well, then the cost will soon become prohibitive.”

Politicians including the Liberal Democrat MP Layla Moran have urged the government to introduce price caps on tests.

Retail expert Nelson Blackley says that retailers will be making a balanced judgement when setting their selling price between the usual commercial parameters of profit and turnover, but also their corporate image and reputation.

“As commercial businesses, they will be looking at least to cover their purchasing and distribution costs but what is strange is exactly why Boots felt they could set the price at such a relatively high level, given they can be produced domestically for around £1 and for much less in China.”

He says Boots will have damaged its reputation and look like it was “exploiting” customers.

Despite the current furore around price, Catherine Shuttleworth, chief executive and founder of retail agency Savvy, says customers will simply not pay exorbitant prices for Covid tests.

“Covid is still a health emergency, retailers will need to make the tests accessible for customers to buy but people will expect the tests to be reasonably priced,” she says.

The experts expect the big supermarkets, including Aldi and Lidl, to start selling lateral flow tests space before free testing ends, which they believe will bring about price competitiveness.

The grocery market is punctuated by keen prices, which are required to win custom in a highly competitive environment. Just look at the level of price matching activity at the big grocery groups.

With hundreds of thousands of people buying tests each week, the product could be a real footfall driver for supermarkets. It could bring shoppers to store who, in anticipation of a positive result, may stock up on groceries and medical supplies for the week.

Therefore it is in the grocer’s interests to attract these shoppers to stores with low priced tests.

Keeping Covid test prices low is not only the right thing to do, it could be the best thing to do to drive additional in-store sales for retailers.

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