Marks & Spencer is gearing up to slash food prices in the wake of disappointing Christmas sales.
On Wednesday the retailer revealed that like-for-like sales of food fell 1.5% in the 13 weeks to 29 December.
Total food sales rose 5.1% but this was down to an aggressive roll-out of new Simply Food stores.
Chief executive Sir Stuart Rose said the openings had led to some cannibalisation of sales in established stores. "Inevitably if you open 200 food-only stores you'll see some attrition," he said. "I'm not happy with it but I've got plans to mitigate it going forward."
Customers were feeling the pinch of interest rate hikes and rising inflation, he added, and reducing prices was "one of a number of ideas" director of food Steven Esom was working on. But he would not specify whether savings would be sought from suppliers. "We are in negotiations with suppliers every day of the week, but there are no specific changes," he said.
M&S's UK overall like-for-like sales were down 2.2%. Total group sales rose 2.8%. International sales rose 15.5%, while the retailer's online business, M&S direct, saw a 78% increase in sales.
Sir Stuart said Christmas had been as tough as retailers had feared. "Our customers said they would be spending less and were also worried about the security of their money in the bank. We're in for a tough time in terms of UK plc until spring 2009."
He warned that the £1bn M&S capital spend had pledged in November for 2008 would be reviewed.
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