Super supermarkets

BRITAIN: With money tight, fewer Britons are going on holiday this summer. Many people are also choosing to eat at home instead of going to restaurants. This has helped to push up sales of food in the country’s supermarkets.

In the UK, shoppers tend to be loyal to a particular supermarket, thanks to its perceived strengths. Traditionally, Sainsbury’s offers quality foods, Tesco offers a wide range of products, Morrisons offers specialities from an in-store fishmonger or delicatessen, and Asda has low prices. But the differences are becoming harder to see as supermarkets have started price wars among themselves to keep buyers from turning to discounters.

In the UK, sales of food products have gone up as prices have dropped.

Supermarkets compare their prices with those of their rivals, and advertising campaigns focus on how little it costs to feed the family. As prices have dropped, sales of food products have gone up between four and eight per cent. In turn, the chains can get lower prices from suppliers because they can place bigger orders.

What seems to be a successful strategy for now may harm the business later, however. It may be difficult to raise prices in the future, say experts. Price cuts “are addictive” says Darrell Rigby, head of global retail practice at Bain & Company. “Customers develop a craving for big discounts and an aversion to full prices,” Rigby told The Wall Street Journal.