A supermarket price war is in the offing after Britain’s biggest supermarket chain, Tesco announced more than £80 million in price cuts.
The UK’s number-one retailer slashed the price of more than 600 everyday items permanently by as much as 30 per cent.
Stephen Alambritis, spokesman for the Federation of Small Businesses (FSB), said: “We have huge concerns about this. It is further testimony to the aggressive nature of Tesco .
“We don’t contest that Tesco is popular, but we feel it is on the edge of getting to a size where quality will go down and prices up.
“It cannot be good for the whole business sector if people end up shopping in four or five major outlets.”
Mr Alambritis said the FSB did not accept the argument that Tesco is one of the biggest single contributors to lowering inflation in Britain – as mentioned by Verdict Research chairman Richard Hyman in his recent report.
He added, “We believe the credit for low inflation should go to the Bank of England’s Monetary Policy Committee [responsible for interest rates since 1997] rather than Tesco.”
Tesco trading director Richard Brasher said the supermarket was keen to re-establish price as the key area of competition between supermarkets in 2007.
A spokeswoman for Sainsbury said the retailer was investing £400m in cutting prices and improving quality as part of its turnaround plan. “We are not planning to let our [pricing] position go. We will remain competitive,” she said.
A Tesco spokesman said, “We are trying to cut prices across the board, particularly at this time of year when customers feel things are slightly tighter.
“The reason we’ve been more successful than our rivals in getting new retail space is that we are willing to be more flexible and innovative. Tesco was one of the beneficiaries of Britain’s biggest ever cyber-Christmas .”
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