AH fires new salvo as supermarkets battle it out
17 September 2004 , AMSTERDAM — Dutch supermarkets Albert Heijn (AH) and Super De Boer have announced they are reducing their prices further in the most radical cost cutting action since the supermarket war started at the end of October last year.
17 September 2004
AMSTERDAM — Dutch supermarkets Albert Heijn (AH) and Super De Boer have announced they are reducing their prices further in the most radical cost cutting action since the supermarket war started at the end of October last year.
With its "Huismerk Party" (Own Brand Party), AH will cut its prices on about 1,000 products by 10 to 60 euro cents, signalling a new phase in the price war. Previously, the cost cutting was focused on A-grade products.
Super De Boer is expected to follow AH's lead immediately. Its chief executive Harry Bruijniks said at the start of this month that he will not allow Albert Heijn to become cheaper than Super De Boer.
"I will go along with every price reduction," he said.
But AH appears set to definitively defeat its largest rival, the French-Dutch company Laurus, which owns the Super De Boer, Konmar and Edah supermarket chains, newspaper De Volkskrant reported.
Laurus is still recovering from its backfired plan to renovate Konmar supermarkets in 2002. The costly operation almost led to the company's bankruptcy.
AH sparked the largest price war in Dutch history last year when it cut prices on 1,250 products. Some prices were reduced by 30 percent.
All of the Dutch supermarkets followed and prices in Dutch supermarkets are among the lowest in Europe. The price war has cost the sector in the Netherlands more than EUR 500 million, pressuring profit margins.
AH is now expanding the price war to its own brands, promising on Friday to reduce prices by 5 to 25 percent on about 1,000 such products.
Products that will become cheaper include orange juice, cola, apple sauce, chips, washing detergent, nappies and toothpaste.
The supermarket chain said it will also use the price reduction to improve product quality and expand its product range. All own brand products will also be given a new label and packaging.
AH will also launch a "luxury" own brand label, AH Excellent. It said products sold under this brand will be of unique quality. The product line will include hazel nut paste, olive oil with a truffle taste and peanut butter with cashew nuts.
The latest stage of the price war represents a new phase because instead of top brand products, own or generic brands will now be reduced in price.
Due to reduced profit margins on A-grade products, supermarkets have turned to their own brand products.
Research bureau Information Resources said the quantity of own brands on supermarket shelves increased by 8 percent since 2002, compared to a 3 percent decline in the quantity of A-grade products.
[Copyright Expatica News 2004]
Subject: Dutch news