How can grocers win a price war?

An industry-wide price war is putting significant pressure on the big four supermarkets, and yet some are managing to report a small but significant return to growth.

Vince Kerrigan, strategic solutions manager at brand communications agency Vital Communications, says: “It is never a good idea to market products or services on price alone; this will quickly erode profits and impact market share.

“It is important to be agile, however, and respond to price-driven competition quickly. Rather than implementing a blanket cost-cutting programme, it is better to select individual product lines where pricing can be adjusted.”

Initiatives that promote value while giving shoppers choice, such as Waitrose’s ‘Pick your own offers’ scheme, could be a good way for grocery retailers to approach the issue.

“The personalised nature of this scheme is a powerful way of tying consumers in, backed by the promise that, no matter when or how they choose to shop, they will be able to buy their chosen goods at a discounted price,” says Kerrigan.

Food prices have deflated consistently since the start of this year, while sales of grocery have reported increases in recent months.

“This uptick in sales is good news for the sector and means there is an opportunity for individual players to drive value and strengthen market share,” says Kerrigan.

“Competing on price is extremely testing and retailers need to develop price-led campaigns that boost their brand and engender loyalty at the same time. Personalisation is the key to this and consumer feedback indicates that tailored discounts and promotions are popular.”