The real casualties of the supermarket price wars

The threat posed by the hard discounters on Britain’s big four retailers has been well documented. 

Tesco’s chief executive Philip Clarke today described his discount rivals as “formidable” as he announced further plans to slash prices beyond the £200m already set aside in February.

But new research shows that the biggest unrecognised casualties of the current price war are the UK’s smallest independent food retailers.

According to Begbies Traynor’s latest Red Flag update, which monitors the health of UK companies, levels of “significant” financial distress among UK food retailers increased by more than 14 per cent in the first quarter compared with the same time last year, as many struggle to survive.

Out the 2,823 UK food retailers suffering from signs of distress, 95 per cent are small and medium sized businesses (SMEs), the insolvency practitioner said.

Begbies Traynor partner Julie Palmer said:

While the news agenda so far has focused on Tesco, Morrisons, Asda and Sainsbury’s and their struggles to maintain market share, the real victims of the current supermarket price wars, namely the smaller independent food retailers and local grocery suppliers which fuel our communities, have largely been forgotten.

Although there has been a returning trend of people buying from local grocers, with specialist food shops coming back into fashion, they cannot compete with their cheaper supermarket rivals.  Meanwhile, the growth of online food deliveries is drawing more customers away from their local shops.

“The plight of small food retailers looks set to continue into the second quarter as the late falling of Easter drives more deal-hungry consumers away from the more pricey local shops and through the supermarkets’ doors as families do their big shop’in preparation for the long Bank Holiday weekend ahead”, Palmer said. 

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