Intense price competition between supermarkets and three successive years of grocery deflation are set to save UK shoppers a total of more than GBP3bn (US$5.2bn) by the end of 2006, according to a new report from Verdict Research.
In 2006 Verdict anticipates the third consecutive year of deflation in the food and grocery sector, as intense price competition continues.
Tesco, Asda and Morrison are well known for their strong price agendas. But the Morrison acquisition of Safeway has shifted the focus of former Safeway stores to a more price-led platform, with Morrison transferring its low prices to its enlarged store base. Tesco and Asda have responded with price cuts of their own, and these moves have been accompanied by Sainsbury substantially bolstering its own price competitiveness. In the face of these competitive pressures, many smaller operators have also increased their commitment to price. These lower prices have saved the
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By GlobalDataThe Morrison-Safeway conversion programme has had reverberations across
The Morrison-Safeway shifting effect will continue in 2006. Though Morrison’s conversion programme is essentially completed, consumer lag in switching means there will remain a far larger proportion of customers up for grabs than usual. Verdict therefore expects competition to intensify in the first half of 2006, and anticipates further price reductions.
Of the almost GBP25bn increase in the grocery market size in the past five years – from GBP110.4bn to GBP134.8bn – Tesco has captured more than half as it has consolidated its hold on the UK market leadership. “This is a phenomenal achievement for one retailer and is unrivalled in any other major
Yet Verdict sees significant growth opportunities for each of the major players in the market. The leading grocery operators boast among the strongest brands in the