The unkindest cut of all
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Professor John Bridgeman, the former Director-General of the Office of Fair Trading, has laid into supermarkets – particularly Asda and Tesco – for giving a misleading impression that they are cutting prices across the board, when the reality is very different.
In a full week just before Christmas, Asda cut nearly the price of almost 800 products. However, for two-thirds of those items, the cut was only 1p. At the same time, it put up the price of more than 850 items, with over half of those going up by more than 10p.
In that same week, Tesco cut the cost of over 900 items but over two-thirds of them saw only a 1p price reduction, while over a 1,000 products saw their price rise, 60% by more than 10p.
Professor Bridgeman calls this practice “price flexing” and, reported in The Guardian, he claims that it shows “a cynical manipulation of the language of value…They are not in reality cutting prices but flexing prices, making them go up and down and destabilising the price structure. All they are doing is introducing so much volatility no one can tell whether prices are going up or down. It can only be to consumers’ detriment and it does their image no good.”
“The most dangerous thing [for] competition in this sector is price volatility. It confuses consumers, deters investors and has driven corner shops out of business because they don’t know what price they have to compete on.” – Professor John Bridgeman
Research by Loughborough University confirms that average price rises are far larger than price cuts among the big four supermarkets, which also includes Sainsbury’s and Morrisons. By far the most common price cut made in the past four years is just 1p which, as Loughborough’s Professor Paul Dobson points out, makes little difference to the bill at the checkout but enables the supermarkets to make the benevolent claim that they are cutting “thousands of prices”.
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