Tesco and Sainsbury Deny Price Scam Allegations

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Feb 19, 2002
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Tesco PLC said accusations that its pricing strategy was a scam were “rubbish,” according to Ananova.com. The company has been investing heavily to reduce its prices and win shoppers from rivals, a Tesco spokesman says. The cut in 1,500 prices, he added, had actually cost the group £70 million in investments. “The money we invested was used to improve efficiency to enable us to increase volumes and eventually reduce prices,” he explains.

In related news, a former senior director of Sainsbury’s claims that his former employer and Tesco had agreed to keep the prices of the most popular everyday products identical in order to stop consumers shopping around, as reported by just-food.com.

The anonymous informer told the Sunday Times that “This is a very sensitive issue but you basically don’t want to get into a price war on the big sellers, the key lines.” According to the Sunday Times piece, the revelation might explain why the high-profile price wars do not involve everyday items on what the former director alleges was a “known value” list. Both Sainsbury and Tesco denied the claims, insisting that no agreement is in place.

Moderator Comment: How should retailers deal with
negative publicity?

Just because you are paranoid does not mean that someone
isn’t out to get you. Someone has clearly determined that it is open season
on Tesco.

Perhaps UK consumers read the newspapers for entertainment
value and do not give much credence to reports of price fixing and frauds or
maybe they don’t care. Certainly, the allegation coming from an anonymous source
makes us skeptical but then again, we always are. [George
Anderson – Moderator
]

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