Sainsbury's boss Justin King has warned the aggressive price wars of recent years are far from over despite inflation returning to the market.
The increase in prices against last year did not change the competitive dynamic of the marketplace in any way, King said this week.
However, price was no longer a differentiator for supermarkets. It was now about "neutralising" price and "containing it as a competitive tool", he told an audience at Barclays' annual Retail Industry Forum.
King said price was no longer the focus as Sainsbury's was already competing on it. "If we didn't we would give others in the market the chance to gain share."
He said that was why the focus had now fallen on to other areas like green issues.
King said Sainsbury's had invested almost £400m in prices since he instigated his turnaround plan in 2004. Price messages had now been replaced by communications around corporate responsibility. "Two years ago it was corporate social responsibility. Then the 'social' got dropped. I think it conjured up a sense that businesses were doing it for something other than good business. The reason is simply that there's a bloody good business reason."
King also used the event to say to branded suppliers that while own label provided a "fantastic point of difference" for Sainsbury's, brands focused on quality food would always be welcome. "Knock on our door first. In fact, knock on only ours. Our customers have a high propensity to buy quality. Sainsbury's is the place to launch products."
Ahead of Sainsbury's second-quarter results last week, King refused to be drawn on whether Sainsbury's was set to overtake Asda as the no 2. "We don't need Asda to fail for us to succeed. Asda can grow and we can grow, and we will still achieve our targets."
The chain reported sales up 6.6% in the 16 weeks to 7 October. It had already added £1.3bn of the £2.5bn of extra sales it is targeted to add by March 2008, King said.