Competition or informal price fixing?

Sainsbury’s is completely awash at the moment with price check stickers on hundreds of branded grocery items from rice to sauces, from pizzas to soups. On the surface a sign that the supermarkets are competing with each other to keep down the prices of basic items at a time when household budgets are being stretched (the big marketing push at Sainsburys at the moment is the idea that you can feed a family for a fiver).

A different slant might be that this form of price-checking (petrol retailers often do it and John Lewis has traded for years using the slogan ‘never knowingly undersold’) is perhaps an informal form of price collusion between the major supermarkets. As long as prices are similar, then both can raise them a few percentage points and improve their margins - whilst giving the impression to the shopper that there is a form of price war going on.

Talking of genuine price wars - Cadbury’s announced last week that it had taken a hit on sales volumes following a decision not to respond in full to the heavy price discounting of easter eggs by the supermarkets. The Times has a good piece on this.