There is a battle brewing in the retail sector - the supermarkets vs the discounters.
The likes of Tesco, Asda and Sainsbury's have faced increased competition from Aldi and Lidl which have rose to prominence in the past year. While the discounters make gains within the market, Asda, Sainsbury's and Morrisons have had to make some considerable changes.
Asda and Morrisons have announced a series of redundancies in recent months while Sainsbury's has teamed up with Scandinavian firm Dansk Supermarked to relaunch Netto into the UK, to compete with the discounters. However, analysts have now highlighted a key battleground which the supermarkets may exploit to tackle the rise of Aldi and Lidl - fresh food.
Speaking to FoodManufacture.co.uk, Darren Shirley, analyst at Shore Capital, explained that this area has paid dividends for the traditional retailers in the past and it could once again prove pivotal in this continued competitiveness. The prediction comes after Morrisons announced that it was investing £19 million to improve its fresh food supply chain.
Mr Shirley told the news provider: "We will watch to see how matters pan out but we can see ground for some bounce back in these areas [fresh food] when price files are corrected through a communication with the customer that highlights the virtues of specification, chilled chain, compliance and range density."
While fresh food will be the next phase of this ongoing battle between traditional retailers and the discounters, Mr Shirley was unimpressed with the pricing strategies employed by these companies. He explained that in the supermarkets he visited the price and promotion messaging were "rather tame".
However, he commended Morrisons which had strong and extensive price statements to reflect its change in trading strategy introduced in March 2014. Mr Shirley said that the changes had led to a much more effective pricing initiative.