Food chains fighting for tag of cheapest

MICHELLE ROBINSON
Last updated 05:00 23/06/2013

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Supermarkets and the Mad Butcher chain are embroiled in a bitter pricing war, fighting to woo shoppers with the best bargains.

Rather than simply pushing their own products, they're taking out advertisements naming and shaming each other, sparking a flurry of legal letters between firms.

The latest stoush began when Pak 'n Save riled competitor Countdown with a cheeky TV advert in which a Countdown shopper apparently saves money at Pak 'n Save.

The Australian-based owner of Countdown, Progressive Enterprises, came out fighting, threatening action against Pak 'n Save's owner Foodstuffs.

"Progressive has threatened to take us to the Advertising Standards Authority regarding our price gap television commercials but they have not followed through on this threat," group general manager of Foodstuffs, Steve Bayliss, said.

The Mad Butcher chain then ran ads claiming meat at a Countdown store in Greenlane, Auckland, was 20 per cent more expensive than its own, attracting a letter of complaint from Countdown, chief executive officer Michael Morton said.

Countdown also launched its own ad campaign against the Mad Butcher, claiming lower prices. Morton said the ad was unfair because it compared specials with regular prices.

Countdown would not be drawn on specific ad campaigns, but said it wanted to give shoppers accurate information. "Certainly where we believe advertising is misleading, we will act to rectify that," a spokesperson said.

"Price comparisons need to be accurate and we feel it's important that New Zealanders have the correct information to make their shopping decisions with."

Ad expert David Thomason said it was obvious why the firms touted cheap prices - New Zealanders are the biggest buyers of on-sale items in the Western world, with around 60 per cent of all supermarket products sold being specials.

Thomason, from advertising and marketing agency DraftFCB, said it was dangerous for retailers to get into a price war.

"There's only room for one brand to be based on the lowest price. Once everyone chases price, margins are eroded and everyone's a loser, including customers."

He said retailers needed to focus on where they were adding value in the market, including better service or innovation. Stores like Mitre 10, which offers DIY workshops, were testament to this.

Back in the front line of the price wars, the Mad Butcher is now thinking twice about his next offensive.

"I don't regret the campaign, we want to keep informing consumers of the difference in price," Morton said. "But it does deter you a little bit."

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- © Fairfax NZ News

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