The supermarket giant's decision to slash prices rattled the grocery market
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Supermarket giant, ASDA, made the decision to cut fuel prices by 4p as part of a strategy to turn the company around. Executive Chairman Allan Leighton has said he will spend millions in efforts to turn the company around.
As a privately owned company, the impact on its own share price is not available but investor fears of a price war saw the value of major grocery giants tumble.
While share prices recovered this morning, they were still significantly below the Friday afternoon level. Tesco fell the greatest at 12%, Marks & Spencer saw a 7.7% decline and Sainsburys at 7%. Speculation has been building the three chains will be forced to keep their prices low in a bid to stop customers flocking back to Asda.
Sainsbury’s CEO Simon Roberts acknowledged the intensifying competition but remained in steadfast in his retailer’s standing. In an interview with The Times, Roberts pointed to Sainsbury’s recent success with the “resurgence in the big weekly trolley shop.”
However, the supermarket’s recent decision to scale back its Aldi price match campaign, from 681 products in November to 606 in February, suggests the growing pressure on price competitiveness remains strong.
Susannah Streeter, head of money and markets at Hargreaves Lansdown says that “shareholders are expecting a period of intense competition, which is likely to hit profits, especially as it coincides with upcoming payroll cost increases.”
It remains to be seen how Asda’s competitors will react to the move, as investors continue to speculate amidst the increasing contest.
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HeadlineSupermarket Shares Plummet £4bn as Asda Sparks Price War Fears
Short HeadlineSupermarket Shares Drop £4bn After Asda Cuts Prices
StandfirstThe combined values of M&S, Sainsbury’s and Tesco took a combined hit of more than £4bn between Friday and Monday.
Supermarket giant, ASDA, made the decision to cut fuel prices by 4p as part of a strategy to turn the company around. Executive Chairman Allan Leighton has said he will spend millions in efforts to turn the company around.
As a privately owned company, the impact on its own share price is not available but investor fears of a price war saw the value of major grocery giants tumble.
While share prices recovered this morning, they were still significantly below the Friday afternoon level. Tesco fell the greatest at 12%, Marks & Spencer saw a 7.7% decline and Sainsburys at 7%. Speculation has been building the three chains will be forced to keep their prices low in a bid to stop customers flocking back to Asda.
Sainsbury’s CEO Simon Roberts acknowledged the intensifying competition but remained in steadfast in his retailer’s standing. In an interview with The Times, Roberts pointed to Sainsbury’s recent success with the “resurgence in the big weekly trolley shop.”
However, the supermarket’s recent decision to scale back its Aldi price match campaign, from 681 products in November to 606 in February, suggests the growing pressure on price competitiveness remains strong.
Susannah Streeter, head of money and markets at Hargreaves Lansdown says that “shareholders are expecting a period of intense competition, which is likely to hit profits, especially as it coincides with upcoming payroll cost increases.”
It remains to be seen how Asda’s competitors will react to the move, as investors continue to speculate amidst the increasing contest.
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