Food price war intensifies as grocers ramp up cuts for 2010

This week both Asda and Tesco launched a raft of price cuts. Asda kicked off its biggest price rollback for a decade, with cuts on 3,600 products. Tesco revealed cuts that it claims will save customers more than £280m, with 12,000 special offers on popular grocery items.

It said the average shopper will save £7.56 on a basket of everyday products compared with last new year.

Morrisons has also launched an ‘Essentials for Less’ campaign, claiming to have cut the cost of many of the items shoppers buy every week. Sainsbury’s is running half-price deals on essentials, while Waitrose is offering a meal deal for £10, and Marks & Spencer is promoting a new range, Simply Fuller Longer, offering high protein meals that promise to keep consumers full for longer.

One analyst said: “The food retailers are all doing well but they are also aware this year will be incredibly tough for shoppers, probably more so after the election, and they need to keep up their aggressive price wars.”

Asda, Waitrose, Ocado and regional grocer Booths have all delivered strong Christmas trading updates in the first few days of the month. Sainsbury’s was due to update as Retail Week went to press, while Tesco reports next week and Morrisons on January 21.

Asda said 12 stores exceeded £4m sales in the seven days to Christmas, compared with eight stores last year, and December 23 was its biggest trading day on record. Waitrose sales soared 20.8% for the week to December 26, compared with the same week last year, and for the week to December 19 sales jumped 16.5%.

Meanwhile online grocer Ocado reported that like-for-likes rocketed 49% to £8.9m in the week to December 26. Its customer orders were up 30% and delivered over 3.5 million items. In the four weeks to December 26, like-for-like sales were up 30% at £40.8m.

Regional grocer Booths reported an 8.4% total sales uplift in the 12 trading days of Christmas and New Year, with like-for-likes up 2.5%.

However, Iceland chief executive Malcolm Walker said the frozen food retailer’s like-for-likes were flat over Christmas. “The last two days before Christmas were fantastic but the run-up was flat. We expect this year to be the same but will continue to grow with new stores. After five years of massive growth, it had to tail off at some point.”