Coronavirus: Supermarket price war as unemployment rises

Lily Canter
·2-min read
Credit: Getty.
Photo: Getty

Supermarkets are gearing up for a price war as unemployment rates are forecast to hit more than four million.

The big four - Tesco (TSCO.L), Sainsburys (SBRY.L), Morrisons (MRW.L) and Asda - are concerned that discount stores Lidl and Aldi will make large market-share gains, as they did after the 2008 financial crisis.

More than 14,000 jobs were lost this week, as the pandemic continues to wreak havoc across the economy.

This coincides with food price inflation rising to 4%, far ahead of the 0.5% rate of inflation, which is squeezing household finances further.

Sainsbury's chief executive Simon Roberts told the Daily Mail: "With rising unemployment pressure on consumer spending we've got to make sure our offer is really relevant.

"We've been putting a lot of emphasis on the value in our offer and invested in price. We have taken gains from discounters."

Since the COVID-19 outbreak Sainsbury's have lowered prices on 300 products, and locked in prices on 1,000 of their items for eight weeks.

Meanwhile Morrisons has cut the price of 450 products and Tesco has expanded its Aldi price match promise to 500 items.

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Tesco chief executive Dave Lewis said: "I don't see why anyone should pay more for a brand at Tesco than anywhere else."

During coronavirus supermarkets have seen sales increase, first with panic buying before lockdown and then through doubling the capacity of online shopping.

Tesco, Sainsbury's, Asda and Morrisons are delivering to 2.8 million households each week, a service not offered by many of the discount supermarkets.

The online grocery market is predicted to grow by more than 25% this year, ahead of the original 8.5% forecast.