Waitrose and Co-op cut prices for ‘tough times’
Waitrose and Co-op have both announced they are cutting food prices in the run-up to Christmas in recognition of tough economic times. The coronavirus crisis continues to hit many parts of the UK economy hard, with unemployment rising.
Companies are expected to cut more jobs after the government’s furlough scheme ends on 31 October. Supermarket prices rose after lockdown, but are now only 0.5% higher than the beginning of the year, analysts said. The coronavirus lockdown in March tipped the economy into recession and triggered panic-buying in many large food stores, which were forced to limit the number of items people could buy. At the time, supermarkets scrapped many special offers, while prices rose 2.5% nationwide in the first month of lockdown, according to analysis by the Institute for Fiscal Studies (IFS). However, as panic-buying eased, those prices drifted back down again.
Analyst firm Kantar, which tracks supermarket pricing, said promotions over the four weeks to 4 October were the highest they had been all year. In the run-up to Christmas and beyond, many people in the UK are facing tough economic times, said Waitrose, which is cutting prices on 200 of its most popular own-label products. James Bailey, executive director at Waitrose, said: “This year has been incredibly challenging for consumers and we know times are tough for many, so we’re reducing prices to provide our customers with great value on the items they buy most.
“Despite offering lower prices, we’re maintaining the quality, high welfare and ethical sourcing that we’re renowned for, so shoppers can spend less without compromising on what they value.”
Similarly, Co-op is investing £50m to lower prices on 300 branded and own-brand products and is launching a value range. Jo Whitfield, Co-op Food chief executive, said: “Value is uppermost in the minds of shoppers and offering good, honest prices and fairly sourced products is important to help shoppers balance their budgets.”
A spokesperson for Co-op added: “The economic uncertainty means shoppers are looking for value for essential everyday products.” The price cuts follow similar moves by the main UK supermarkets Tesco, Asda, Sainsbury’s and Morrisons.
Waitrose and Co-op both face an uphill struggle on price when it comes to competing with the big four supermarkets and discounters Aldi and Lidl, GlobalData senior analyst Thomas Brereton said. “It’s a war Waitrose and Co-op can’t win,” he said. They don’t have the market clout of giants such as Tesco, which can pressure suppliers into giving it better prices than smaller rivals, he said.
In addition, Waitrose is seen by some shoppers as being more upmarket and pricier than rivals, and altering that perception when consumers are getting more cost-conscious due to tougher economic conditions would take time, he said. “You won’t get Aldi or Tesco shoppers suddenly switching to Waitrose because they’ve cut the price of bread and milk,” he said, adding that Waitrose’s efforts to expand its online offering would be far more likely to bear fruit.
Richard Lim, the chief executive of Retail Economics, said the “big driver” for all supermarkets had been trying to stop the discounters gaining market share again as they did in the last recession, which had “a huge impact on people’s behaviour and spending patterns”. During the last financial crisis, there was much more of an emphasis on people making their budgets stretch and getting value in terms of price and quality, he said.