Sunday, July 5, 2009

Price wars are nothing new. McDonalds vs. Dunkin Brands is but one example. Both of them have positioned their price points directly at Starbucks and from all accounts it working. Dunkin Brands are growing strongly and customer frequency is holding solid or growing, While Starbucks continues to close stores and report a drop in frequency. We have been hearing of strong European competition in the Grocery and Convenience store sector currently British Supermarkets have sparked a new price war with Britain's pound shops as reported in the London Mirror. Here is what they are saying” High street giants including Tesco and Asda are launching a series of cut-price promotions for under £1. The aim is to win back customers from the growing number of discount chains such as Poundland and 99p Stores. But Poundland has hit back with a new range of £1 sandwiches. Asda, which has more than 7,000 lines at £1, said: "It makes shopping on a budget easier for customers." I feel it portends things to come here as well.
The price, value, service equilibrium is being reset. Morton’s closed 3 units on July 1st and continues promoting bundled value meals. In New York City at the high end we are witnessing the same occurrence. When will it end? Only when the consumer is on the upswing. I predict that we will see increasing competition in the US between Grocerants, Convenience Stores, and Dollar Stores, Supermarkets all focusing in on US chain Restaurants. Yes the competition is heating up and the grocerant sector is on the move and price value of bundled product offerings is the reason.

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