Competitor or consumer – who is the enemy in the supermarket price war?

We'll match anything. Fell over in Sainsbury's? Come to Tesco - we'll push you over twice. (Never said by anyone associated with Tesco). Image Credit: Martin Bodman.
We’ll match anything. Fell over in Sainsbury’s? Come to Tesco – we’ll push you over twice. (Never said by anyone associated with Tesco). Image Credit: Martin Bodman.

If you have ever watched The Big Bang Theory you will be familiar with the game ‘Rock, paper, scissors, lizard, Spock’. It’s exactly like rock, paper, scissors, with added Spock and lizard. But this version of the game needs to step aside, because here in the UK we have a new one: Tesco, Lidl, Morrisons, Asda, Sainsbury’s. It’s a game that has been fiercely played for a couple of years now, but with Christmas coming, the T-L-M-A-S Winter Olympic Championship Tournament League Cup Derby is about to begin.

The prize is a big one: Britons beat even Americans in terms of festive spending, on average splashing out £700 each on festive goods. (Our grandparents would like to remind this point that they only got an orange and the chance to stuff onions into the Christmas dinosaur). We spent £43billion in the last two months of 2013. That’s a sum that is worth fighting for a piece of.

But what is this war being fought for – liberation or occupation? Obviously businesses must make money, but that doesn’t mean they are always out to manipulate us. Conversely just because we are the consumers doesn’t mean we are the ones in control. So while Tesco and Asda staff may meet in each other’s car parks at night and throw stale doughnuts at each other to determine who has the cheapest grapefruit, are the consumers actually benefiting?

Let’s get the obvious benefit out of the way. All this competition has dropped the price of food. After a 0.1% rise in October, food prices were down 0.2% on 2013.

I suppose we could to stop this post now. Yes, it’s lowered food prices this Christmas. That’s a good thing. Let’s all go and buy some After Eights.

But is this not just another way of price-fixing? This is where two or more companies agree to sell the same products for an identical price. With people unable to find it cheaper somewhere else, they have no choice but to pay that price, one that is usually high. With supermarkets only competing to get our attention by matching other supermarket prices they are not trying to give us a good deal, they are simply removing any incentive for us to shop elsewhere. While as customers we are used to looking around for the lowest price, supermarkets are trying to take the initiative away from us by monitoring prices themselves and automatically matching.

[bctt tweet=”Is supermarket Brand Match just price fixing by another name?”]

And if we could have spent less we get a voucher for the difference, even if it’s a single penny. It’s not technically price-fixing, and even if it was the government would have to prove that the supermarkets had colluded together in order to do anything about. But it does raise an interesting question. Sometimes this practice drives down the price of food, however the statistic earlier about the lower price of groceries is not all to do with supermarket price wars. A drop in oil prices has made it cheaper for certain foods to be produced, as well as making distribution less costly. That’s an outside economic factor. That has nothing to do with supermarkets battling to give us the best deal.

And if all Tesco is doing is trying to make its prices identical to Asda’s, are they really even trying to give us the best deal? They are all fighting to keep their customers. That’s what this is about, as no one who shops at Sainsbury’s is going to decide to shop at Tesco because the prices are the same.

But the supermarkets aren’t entirely oblivious to this problem. The price matching system is now firmly entrenched and can be left to its own thing. It may have solved a problem for the supermarkets in the short term, but now they are getting back to the original issue: trying to steal customers from their competitors. How can you do this, when your prices are identical?

It seems the answer for some supermarkets, on some occasions, is ‘dishonestly’.

[bctt tweet=”One supermarket claims to be cheaper than another, but what aren’t they telling you?”]

You’ve probably seen the adverts now, which all the supermarkets seem to be doing, where they show the price of an item of food or drink in a rival supermarket and then give their own, much lower price. So at first glance it seems that Asda’s unicorn litter trays are indeed cheaper than Tesco’s unicorn litter trays. Except that when you look at the small print at the bottom of the screen, you will see that the reason for the huge price difference is usually because the advertising supermarket is running a sale. They have gone into their rival supermarket to find the price of these items, then deliberately put them on sale at a lower price. They then advertise them as though they are just naturally cheaper, knowing that many people won’t bother to check out the small print, or think too far into the matter.

So who is fighting whom? Are the wily consumers, with their demands for affordable goods the enemy of supermarkets, or is it the rival brands who are being targeted? Because matching prices actually does nothing for the consumer. It just forces you to remain shopping with your chosen supermarket, or to move for no reason. And competing on price point for one single item in a store full of millions seems like a cheap and pointless tactic. It’s like going into McDonald’s and ordering the jumbo large deep fried butter lard burger with extra battered chips meal and then asking for a Diet Coke.

[bctt tweet=”Two supermarkets battling over the price of one item doesn’t solve a problem for the consumers.”]