Making sense of the past seven days
Tesco's latest price initiative provides yet more evidence of tightening trading conditions.

The giant retailer is launching a£5 million ad campaign tonight, designed to reinforce its value credentials. It's Tesco's biggest price-focused campaign in 10 years and will compare the prices of 10,000 items against its grocery rivals.

Following hard on the heels of more than£500 million of price reductions by Tesco and Asda, it's clear that a fresh price war is underway among the supermarkets.

That's hardly surprising, since consumers have less disposable income at present than at any time in the past five years. Although, as usual, the supermarkets are leading the charge and making the most noise about value, many other retailers will also need to reassess whether they are competitive enough.

On Tuesday, as he posted first-quarter figures, Marks & Spencer boss Stuart Rose said he expected opening price points to be under pressure if difficult trading conditions continue. Everybody will be sharpening their pencils, observed Rose, ready to recalculate their positions.

Price competitiveness is and always has been part of the entry ticket in retail, but renewed deflationary pressure will pile even more pressure on the industry's weaklings. We've passed the most recent rent-quarter day with a relatively small number of collapses. But if difficult times persist, there may be more blood on the floor next time around.

Talking of Tesco, next Wednesday is the acceptance deadline for the grocer's takeover of garden centre group Dobbies. The word is that Dobbies shareholders will sit on their hands and wait to see how the stand-off between Tesco and tycoon Sir Tom Hunter plays out. Hunter, who owns the Wyevale garden centre chain, holds more than 25 per cent of Dobbies shares and could yet thwart Tesco's ambitions.

Tesco will not countenance co-owning the business with Hunter, so at some point the two sides will have to sit down and hammer out a mutually acceptable solution, assuming that there is one. It's by no means out of the question that Tesco will simply walk away.