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Tuesday, 28 August, 2001, 05:52 GMT 06:52 UK
UK 'poised for supermarket wars'
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Rivalry between UK supermarkets is set to escalate into a full-scale price war, retail gurus have warned.

Although UK grocers in the late 1990s opened a gloves-off fight for customers, there has been a "marked relaxation in the intensity of competition" in the sector in the last nine months, a report by consultants Verdict Research said.

Verdict put the rise down to the integration of a new management team at Asda, the US retailer bought by Wal-Mart two years ago.

Asda, which Wal-Mart has pledged to take above Sainsbury and even Tesco in the UK supermarket league, is now poised to spark a new battle for trade, the report said.

The opening shots in the price war could be fired by Christmas, to the benefit of customers and the UK as a whole, the consultancy said.

"A more competitive trading environment should be good news for customers and the economy at large, both beneficiaries of low inflation," the report said.

Asda unrest

Asda's leading role in the grocery wars assumes minimal disruption from the loss of company president Paul Mason, who it was announced on Friday has been poached by discount retailer Matalan.

The loss represented the second top-ranking resignation in less than a year, after Allan Leighton quit as president last September.

Seven other senior staff members have quit, including Mike Coupe, who joined Iceland as managing director, and Justin King, now managing director of food at Marks & Spencer.

Tony DeNunzio, Wal-Mart's European finance chief, is currently seen as favourite to become Asda's next president..

Tesco praised

In Tuesday's report, Verdict also said it rated Tesco as the UK's highest rated supermarket, thanks largely to the retailer's "growing skill as a hypermarket operator".

While Waitrose and Marks & Spencer remain strong in the grocery sector, Sainsbury and Safeway may fare less well from a price war, the report said.

See also:

29 May 01 | Business
Big future for supermarket giants
15 May 01 | Business
Asda to create 10,000 jobs
11 Apr 01 | e-cyclopedia
Hypermarket economy: Checkout the big boys
09 Apr 01 | Business
The billion pound grocer
10 Apr 01 | Business
Tesco profits top 1bn
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