What do you have to do to drive home a message into what would appear to be the thick skulls of the multiple retailers?
Following on from our recent stories on how the retail focus on price was driving both value and suppliers from the fresh produce category, Asda has now decided to spark off a fresh price war on that old favourite, the banana - slicing off a whopping 21p a kilo for the lucky consumer.
But wait, Asda is making it very clear that this time, for once, it will be taking the hit on this one, and funding the cut from its own pockets, not those of its suppliers.
All good and noble you might think, but how many retailers will be following suit? Already the others have matched Asda’s price slump. And while the Leeds-based retailer has laid down the gauntlet on whether the cuts will be retailer funded, this cannot be sustained for long.
Perhaps more importantly, what is the net result? Quite simply, bananas, a category which, as history has shown time and time again, is not price sensitive, will be further devalued in the eyes of consumers. And come the time when prices inevitably begin to creep back up, will that push consumers, used to dirt-cheap product, away from the sector? All this, and we have not even looked at the issue of whether or not Asda’s tactics, using Wal-Mart economies of scale to fund its price cutting, is tantamount to below-cost selling.
