Why are Britain’s supermarkets in a race to bottom right now and what will they find when they get there?
I heard on the Today Programme this morning that Sainsbury’s are setting up a joint venture with Danish retailer Netto, in an attempt to take on the rapidly growing ‘discounters’. Meanwhile, Morrisons have just announced another raft of ‘permanent price cuts’ on a whole range of groceries to catch up and join the war between big supermarkets and discounters. But will this add to the market or shrink the profit pool?
Speaking on the Today Programme, supermarket analyst Natalie Berg explained that “reductions designed to get people into stores and spending, are actually having a deflationary impact on sales because, supermarkets can cut prices but that doesn’t necessarily mean that shoppers will go out and buy more food or spend more money”.
Natalie Berg also went on to say that recent figures from the British Retail Consortium show that total retail food sales are in decline for the first time in six years. So, picture the day when the race to the bottom is finally run. Every competitor will be doubled up in agony, wondering why on earth they took part in such a brutal game. Looking around them, they will survey an obese population, an exhausted health service, torn rural communities and fields devoid of life. And, in the gleaming fortresses they constructed from which to wage their war, empty shelves.
This is not scaremongering, but simply a wake up call. Analysis of the current price war highlights the fact that there will be no winners in this race. In the melee it is vital that we safeguard the foundations of our food system – the farms that produce it. That is what Free Range Dairy is here to do. We don’t conscript anyone to join our movement but urge you to volunteer your support so that, when the dust settles, there are still high quality milk and dairy products in your fridge.