Tesco has sparked fears a supermarket price war is imminent in the UK as it looks to cut its prices.
The supermarket is reportedly aiming to grab more market share in the UK and strengthen its leading position in the market by revamping its entire product pricing structure from the start of next week.
Around 3,000 products will be slashed in price in a push which is likely to cost the retailer around £500 million.
One Tesco produce supplier told freshinfo: “Tesco has a war chest from its suppliers and it will have from scrapping the double Clubcard points. This was inevitable, but they have been doing this to us for a long time. No one is listening to us.”
The group is apparently working on a major overhaul of its pricing structure and, according to suppliers, will dispense with a recent move towards promotions and develop a new strategy of 'everyday low prices' - similar to that employed by US giant Walmart - and present shoppers with offers that are easier to understand.
Despite remaining in top spot in the UK, Tesco has lost ground to competitors and, as new chief executive Philip Clarke recently admitted, has failed to lead the supermarket sector as it has in the past.
Bryan Roberts, director of retail research at Kantar Retail, told The Guardian that the retail landscape in the UK had altered dramatically over the past few years.
"The number of promotions has been increasing year on year, quarter on quarter. There is no longer any reason for customers to buy key things like cheddar cheese or dishwasher tablets when they are full price."
Some fear that the shake-up in pricing at Tesco could precipitate a new price war in the UK, a concern reflected in notable decreases in the share prices of listed competitors like Sainsbury's and Ocado.
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