Grocery group to slash cost of basics

A TOP Irish supermarket chain has slashed prices on basic household products in a bid to lure cash-conscious shoppers away from the booming low-cost German multiples.

The Musgrave Group, which owns Supervalu, is providing consumer cheer for shoppers by rolling out its Daily Basics bargain range to stop shoppers leaving their stores to buy cheaper staple items. Headline items include 65c for a loaf of white bread and 50c for two litres of bottled water, with many products in the range matching or beating the discount offerings in Lidl and Aldi.

The supermarket’s strategy shift comes after strong indications that consumers were minding their money and voting with their feet to find the best value goods.

Supervalu denied the full rollout of its new bargain product range was a bid to derail the growth of the German-owned stores and said it was instead a direct response to a change in buyers’ behaviour.

Spokeswoman Sue Lamon Diver said consumer research suggested shoppers were prepared to compromise on some products to a degree they would not have done two years ago. She said the retailer wanted to ensure shoppers did not have to leave Supervalu shops to find the lowest value on items they showed a willingness to compromise on.

“It is more about our own strategy and making sure we have a very different low value offers across the store.”

She said households have less disposable income available to them over the past 36 months and were looking for cheaper alternatives.

Dermott Jewel, chief executive of the Consumers Association of Ireland, welcomed the move but advised consumers to assess the totality of what is on offer from Supervalu.

“It is good to see Irish companies getting into the fray and attempting to be as competitive as Lidl and Aldi,” he said in response to Supervalu’s announcement.

“However, it is important to see if these reductions will be spread across a broad range of products. Consumers, therefore, should not be mesmerised by a few special offers but assess whether Supervalu is offering the same level of competitive pricing throughout their stores.”

The latest twist in the competition between the multiples comes after a sales study showed people spent more in the three months before Christmas than they did the previous year.

All the big-named retailers benefited in varying degrees. Supervalu, which is preparing a full rebranding of its own products later this year, preformed strongly in 2011.

According to grocery research by Kantar Worldpanel the Musgrave-owned chain now holds 20% of the grocery market.

The German low-cost outlets have increased their combined market share to 10% since the recession.

All these still trail Tesco (28% market share) and Dunnes (24% market share).

A survey by the Irish League of Credit Unions has shown that more people are doing their big household grocery shop in Lidl and Aldi, but all retailers trail the dominance of Tesco, to which almost 40% of people went for their big shop.