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In the battle for lower prices, quality is a secondary concern. But Sainsbury's has the opportunity to become a UK standard bearer, says James Farnham
The battle for Safeway has captured so much attention because it has been heralded as the last great acquisition opportunity in the UK grocery industry. In fact the endgame in UK food retailing has barely begun.
Now that the Competition Commission has effectively levelled the UK food retailing landscape to four key players, each with grocery market shares of 14 to 24 per cent, the basis of competition between the multiples could be set to change fundamentally.
Between 1980 and the mid-Nineties competition between the major supermarket chains was a game of copycat strategies, with the big operators seeking to match each other on store location, price, quality, product range, convenience/service and store ambience. The end result was that you could walk into any UK supermarket and be hard-pressed to know which one you were in.
With all the food retailers being virtually identical, the basis of competition became much more focused on price alone, a process culminating with Wal-Mart's takeover of Asda in 1999. Asda cut loose from the industry's convergent competitive pattern and started to make a quantum leap in price reduction with its everyday-low-prices (EDLP) initiative. This was no tactical price gimmick funded from Wal-Mart's ivory tower in Bentonville to impress the Brits; it represented the...