Ahold's flagship supermarket chain Albert Heijn is being pushed into a price war with competitors by shoppers hunting for cheaper products.
The chain announced on Monday that it was slashing prices on 1,250 everyday items - such as tea, coffee, milk and crisps - by 7 to 35 per cent. Further price cuts may be on the agenda, depending on the reaction from competitors.
'Everyone asks when it will stop. We expect reactions, and we may have to take more measures,' a spokeswoman said.
The price cuts began when it was noticed that customers were shopping at Albert Heijn for its premium products, but were going to cheaper supermarkets for everyday items. The reductions were made to encourage customers to buy all their shopping at Albert Heijn.
'We are not trying to be the cheapest supermarket in the Netherlands. That is not our position. Of course, we didn't want to cut prices, but we had to do something to maintain our market share,' she said.
Customers in the Netherlands are being increasingly attracted by price, rather than the quality of products, an Ahold spokesman said.
The upmarket chain had suffered from a decline in sales in the first half of this year. Albert Heijn's market share fell to 22.1 per cent in the second quarter from 24.5 per cent the previous year, according to Dutch research company GfK.
Separately, Ahold issued a gloomy outlook for 2003 as it reported a EUR4.33 billion (£3.01 billion) loss last year, which it blamed on distractions caused by an accounting scandal earlier this year.
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