When former Asda boss Paul Mason and former Tesco grocery trading director Colin Smith joined Somerfield in January, its basket was 14% pricier than the cheapest retailer, according to The Grocer 33 weekly survey.
However, it was only 11% more expensive than last week's cheapest retailer Tesco. And while it is 13.6% more expensive than Tesco this week - mainly due to the price of kippers - it is offering the cheapest price for best-sellers such as four pints of milk, Nescafé Original Coffee 200g, and Australian red wine.
One Somerfield supplier said: "It has realigned prices over the past two weeks. In today's market it can't afford to take too high a premium, even though it is in convenience, and probably needs to be more price competitive on big lines."
However, another supplier said Somerfield was also looking at range rationalisation and streamlining offerings. "We have seen a much more proactive stance on managing the range. Most of Somerfield's stores are smaller ones and, in the past, there have been too many lines on shelf, confusing consumers. We've been doing a lot of work to reduce duplication."
Analyst Sanjay Vidyarthi of Teather Greenwood said the company was working hard to escape from no-man's-land. "They are not Waitrose quality and they are not cheap either. As a c-store they are more expensive than Tesco Express. They feel they must improve their pricing. They know they can't change their cost structure - they have relatively low volume and small stores - so the drive has to be sales."
Somerfield is also putting greater emphasis on its 100-strong value range Makes Sense! It is improving the placement of the range in stores and on-shelf presentation. The range is being highlighted with product-specific shelf barkers, posters and POS.
It also plans to extend the number of products within the range later this year.