Elaine Watson
Multiple buyers expect deflationary pressures to increase over the festive season as the annual round of price slashing begins in earnest.
And some of them share suppliers' fears that relentless discounting is driving value out of the industry.
In an exclusive survey for The Grocer, almost half the panel of buyers thought heavy price cutting over Christmas was not a good thing for retailers, while a whopping three-quarters reckoned low prices devalued their category.
One buyer commented: "A price-driven Christmas is a good thing for customers, but not for retailers because they all match each other within a couple of days and lose potential profit if incremental sales are not achieved." Almost all the panel (90%) said shoppers were so used to the annual price bonanza that they expected bargains, with one pointing out that Christmas came later every year as shoppers waited for great deals and expected full availability up to the 11th hour.
The survey came as The Grocer 33's weekly shopping basket dropped below £36 for the first time this year (p20).
Grocer 33 data shows pricing competition over the last month has been hotting up, with heavy promotional activity on McVitie's Chocolate Homewheat, 8-packs of Penguin biscuits, Müller yogurt, Birds Eye fish fingers, Diet Coke, Stella Artois and Hardys wine.
However, some buyers claimed quality, range, service and availability would be just as important as price this Christmas. One commented: "Even though there will be a lot of communication on price I don't think it will necessarily change people's behaviour."
Most agreed that the festive period was crucial: "Christmas can make or break the whole year. This Christmas more than ever will expose any underlying weaknesses in the trade."
Analysts said the apparent easing of deflation at Tesco 0.4% in its third quarter compared to 1.6% in the second quarter reflected volatility in categories such as petrol and produce rather than being a sign that the pricing environment was becoming more benign.
Indeed, all the signs suggested that pressure on manufacturers was notching up, said one analyst.
>>p22 Reader panel
{{NEWS }}
Multiple buyers expect deflationary pressures to increase over the festive season as the annual round of price slashing begins in earnest.
And some of them share suppliers' fears that relentless discounting is driving value out of the industry.
In an exclusive survey for The Grocer, almost half the panel of buyers thought heavy price cutting over Christmas was not a good thing for retailers, while a whopping three-quarters reckoned low prices devalued their category.
One buyer commented: "A price-driven Christmas is a good thing for customers, but not for retailers because they all match each other within a couple of days and lose potential profit if incremental sales are not achieved." Almost all the panel (90%) said shoppers were so used to the annual price bonanza that they expected bargains, with one pointing out that Christmas came later every year as shoppers waited for great deals and expected full availability up to the 11th hour.
The survey came as The Grocer 33's weekly shopping basket dropped below £36 for the first time this year (p20).
Grocer 33 data shows pricing competition over the last month has been hotting up, with heavy promotional activity on McVitie's Chocolate Homewheat, 8-packs of Penguin biscuits, Müller yogurt, Birds Eye fish fingers, Diet Coke, Stella Artois and Hardys wine.
However, some buyers claimed quality, range, service and availability would be just as important as price this Christmas. One commented: "Even though there will be a lot of communication on price I don't think it will necessarily change people's behaviour."
Most agreed that the festive period was crucial: "Christmas can make or break the whole year. This Christmas more than ever will expose any underlying weaknesses in the trade."
Analysts said the apparent easing of deflation at Tesco 0.4% in its third quarter compared to 1.6% in the second quarter reflected volatility in categories such as petrol and produce rather than being a sign that the pricing environment was becoming more benign.
Indeed, all the signs suggested that pressure on manufacturers was notching up, said one analyst.
>>p22 Reader panel
{{NEWS }}
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