Supermarkets sweep - then weep?

Supermarkets are outperforming their retail rivals, but may soon cop it from the OFT for price fixing.

by
Last Updated: 06 Nov 2012

The sector has experienced a boost in sales prompted by bargain-hungry consumers. A survey of the supermarkets by the CBI found 37% of respondents boasted a year-on-year rise in sales this month, up from 7% in August. Admittedly, that's against a pretty gloomy retail backdrop.

And there's more bad news a-coming, potentially. The OFT has revealed it has ‘reasonable grounds to supect' that pricing data has been passed between supermarkets via suppliers. Which could land the retailers with severely rapped knuckles, damaged reputations and a hefty fine or two.

The cartel investigation covers 24 companies, and involved raiding Tesco, Asda, Morrisons and Sainsbury's, as well as speaking to such suppliers as Unilever, GSK, Nestle and Mars.

And it comes just when some in the sector are doing so well. Peter Marks, the Co-op's chief executive, said that his group's convenience stores had picked up business as shoppers cut back on driving to larger, out-of-town superstores to save petrol. Co-op reported underlying profits of £191.1m for the half-year to July 26 - a rise of 35.6%.

The retail world in general isn't having such an easy time persuading shoppers to part with their precious readies - sales are in freefall, and the pressure on consumer demand looks set to persist well into next year. Sales of durable goods and clothes have both taken a whack according to the CBI; Alexon, the fashion group behind Bay Trading and Topps Tiles, said that there was little chance of it hitting full-year targets, as it reported a 41% fall in half-year pre-tax profits and cut its dividend by two-thirds.

Car sales also continue their slump - they hit their lowest level for more than 40 years in August. So it's all looking grim for retail as a whole. Perhaps inspiration should come from the supermarkets, and their knack for diversifying: the latest move is to ramp up their provision of flu jabs. That's after Sainsbury's introduction of the in-store dentist. Next up: eye-tests in the secondhand car forecourt...

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Finance Retail

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