Will this be the war to end all wars? Today Tesco fired what it hopes is not just the opening shot of another supermarket price war but a knockout blow. You can read all about the Big Price Drop here.
In truth, it’s not so much a game-changer (in the sense that Asda’s Price Guarantee was genuinely innovative) as the same game with higher stakes. Certainly there’s no doubting the scale of the investment, with Tesco ploughing £500m into the push.
In a conference call with reporters this afternoon, UK boss Richard Brasher said the investment was double what Tesco spent on its double points Clubcard promotions, which will end next month.
He added that the new push had been six months in the planning and was by far the biggest outlay of its kind he had seen during 25 years in retailing. It calls to mind the old Cold War thinking of ‘with enough shovels we will bury you’.
Evolution Securities analyst David McCarthy yesterday argued it’s a myth that price wars are in nobody’s interest: they’re in the interest of whoever is best placed to win, he said. With Walmart behind it, Asda will surely respond. Cash-rich Morrisons, too, is well placed to meet the challenge. The verdict from investors yesterday was that Sainsbury’s (and little Ocado) would feel the pain most.
Those pining for peace in our time have little hope this conflict will be over by Christmas.