Due to the economic situation brought on by the COVID-19 pandemic, many shoppers have become more aware of what they spend at the supermarket.
Waitrose and the Co-op are joining the price war started by Tesco in June when they began price matching Aldi. Waitrose will be cutting prices by an average of 15% from Wednesday. Meanwhile, the Co-op is set to invest £50m to lower the cost of more than 300 products. The new "Honest Value" campaign will cut prices on 50 items such as British meat, soft drinks, fruits and vegetables.
Many competitors of Waitrose and the Co-op have reduced their prices drastically to encourage more shoppers to their stores, and now they are following suit. After Tesco cut prices to match Aldi on more than 500 products, Sainsbury’s, Asda and Morrisons followed and implemented revised budget plans to prepare for the festive season.
The price war comes as the last recession gave the market share to discounted stores such as B&M, Aldi, Lidl and Poundland, as other key players lost out on customer retention.
The impact of the price cuts can already be seen in the inflation rate, which lies 1.9%, a reduction of more than half since June when it was 4%. Kantar revealed that 31% of grocery sales in September were linked directly to promotions.
Co-op food stores’ chief executive, Jo Whitfield, told The Guardian that "value is uppermost in the minds of shoppers."
Supermarkets are aware that many fear the spread of COVID-19 and the implementations of lockdowns and more stringent rules on social distancing. With stricter measures looming, many people are becoming increasingly unwilling to leave their homes to go to shops. In addition to a reluctance to visit stores, there is growing irritation among consumers surrounding delays in deliveries for online shopping, due to the increase in demand.
Richard Lim, of Retail Economics, said, “It is going to be incredibly challenging to deal with the levels of demand given the restrictions in place because of Covid-19.”
“The tactic is to build up a bit of loyalty ahead of Christmas.”
With the furlough scheme ending, a rise in unemployment and increased limits on household mixing, Lim also commented that consumers are going to be “less indulgent” in what they spend on food and groceries.
Retail Economics also predicts 36% of shoppers will cut back on their spending over the festive season. Only 12% of shoppers will spend more than they did last year on Christmas shopping, specifically on their groceries.