The facts say it all. Hard discounters like Aldi and Lidl have seized more than 8% UK market share, and a basket of Aldi own-label goods is about 15% cheaper than similar Asda-labelled goods.

After consistently failing to spot the changing value perceptions of cash-strapped consumers and the discounters’ ability to seize the pricing high ground, the majors are now talking about long-term price cuts and delivering more value. That’s a tough decision for any UK supermarket CEO - but it looks like the only way forward.

“Store formats must be reviewed to drive more footfall and spend”

There is a telling precedent in France, where supermarkets have turned back the advance of the discounters by adopting price-led strategies. This success of that strategy provides strong reassurance for British supermarkets pondering the future.Following a period of rapid growth, discounter market share in France has dropped from its 14% peak to about 12%. Initially, French supermarkets did much the same as their UK counterparts, expanding their convenience outlet presence and developing multi-channel initiatives. But the French went further, expanding budget product lines, reviewing own-label pricing and significantly cutting branded goods prices. Offers, pricing, promotions and own-label tiers were all simplified to deliver both quality and value-for-money pricing.

As a result, a basket of budget own-label goods is now about 13% cheaper at a French hypermarket - 9% at a supermarket -than at a discounter. A basket of branded goods is only 5% more expensive at Carrefour than at Lidl, compared with the roughly 20% premium in the UK.

The discounters have been hurt and are falling back in France. Market share is down almost 2%, about 150 stores closed in 2013, and Lidl has noticeably slowed expansion, opening about 20 new stores annually rather than the usual 80 to 100. Carrefour is to buy 800 Dia stores as that discounter exits the French market.

In rejecting a strategically untenable business model to fight the discounters, French supermarkets worked with suppliers to cut prices and share the burden of lower margins. Despite some short-term revenue and profit decline, the supermarkets’ price-led strategy has worked. Carrefour returned to sales growth in 2010 and to margin growth in 2013, while Leclerc (most aggressive on pricing) has seen revenue grow 6% per annum.

The message for British supermarkets is strikingly simple: they must focus on price - they have a big gap to close. Today, a basket of similar branded goods at Tesco costs over a fifth more (c22%) than at Carrefour. Morrisons, for one, has decided how it will respond to the discounters with last week’s announcement about its price-matching loyalty card.

Where one goes, others should follow. Together, UK supermarkets and their suppliers must create a value-oriented proposition. This will mean redefining consumer pricing and working on all aspects of supplier costs and pricing. Supermarkets must drive rigorous zero-base cost reductions across operations and supply chains. Private labels must offer more value against discounters’ ranges. Store footprint and formats must be reviewed to drive more footfall and consumer spend. Target consumer segments must be more clearly defined so that differentiated propositions can be delivered. And non-core businesses (such as financial services and mobile phones) that don’t directly support the fundamental consumer proposition should be rationalised.

The reassuring French experience shows that bold action can meet the discounter challenge. UK supermarkets must act now to reverse their decline and create a sustainable business model that will win both consumer and investor support.

Jonathan Simmons is partner and head of the European retail & consumer products practice at L.E.K. Consulting