Monday 26th September….. A day for your diary

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Monday 26th September….. A day for your diary

This is not just another Monday, it is day that could change the mind set of retailers around the world. Switch on the news and you will hear about the financial crisis in Europe or America and the knock on affect around the world. Customers are cautious and not spending. What is the answer, have a sale? In previous articles I have mentioned this before and that it is not the solution for retailers, but if the big end of town start playing the game we all have to watch and act. Monday 26th is the date that Tesco with an annual profit of 3.4 billion pounds last year, up 10.1% on the previous year, decided to get serious with a price war. The most important price war in 60 years. This is the day they launch “The Big Price Drop” where 3,000 shopping basket lines will be reduced in price and could save consumers 500 million pounds. Even Tesco say this is the biggest price reduction in 25 years to match the biggest squeeze in living costs in 60 years. The other food retailers will have to take notice and play by the same rules and other retailers in other sectors and in other countries will also need to take note. What are the consequences? Farmers are concerned that they will be asked to take some of the pain, this when they have seen a reduced margin in recent years. Price will become an even more of a message to the customer. People are already shopping on price and that message will be reinforced. One result of this move is that Tesco will squeeze other retailers out of the market. I have forecast that the inefficient retailers will disappear and this is another nail in their coffin.