“Despite the fact that the big four grocers have closed the price gap considerably to the discounters it hasn’t reached a tipping point where the movement of customers towards the discounters has either reduced or stopped”. Mike Coupe ceo at Sainsbury’s told Reuters that he had narrowed its price gap to just under 20% from about 38% early last year, but the tipping point in countries such as France had been a gap of 5 to 10%.
“The ultimate end game will be to get to a point where the profit margins of the discounters are squeezed to the point where their German lords and masters prefer to spend their capital in the U.S., China, Eastern Europe, anywhere but the UK,” he said.
Sainsbury’s has spent 150m pounds in lowering prices over the last year and plans further targeted cuts on the 10% of its products that overlap directly with the discounters, financed by cost savings.
