Will shoppers win as supermarkets declare price war in the aisles?

Supermarket wars have broken out as never before.

And the fight for customers is set to reach a frenzy with just over 50 shopping days until Christmas.

The run-up to the festive period is always critical, but this year it will be even more so as the retail landscape has changed beyond recognition.

Analysts say the supermarkets are facing their toughest period in decades. Giant Tesco, for so long the surefooted dominant force, is in trouble, last week announcing a disastrous 92% slump in profits for the past six months to £112 million. There was also an admission that previous profits were overstated by more than £250 million. Morrisons, too, have had to launch a whole new price-cutting strategy to survive.

Meanwhile, the new kids on the block, discounters Lidl and Aldi, are going from strength to strength. At the other end of the market, even posh people’s supermarket Waitrose has been offering deals and free coffee to shoppers in a bid to attract more custom, winning praise and criticism in equal measure.

Here’s our look at the rollercoaster world of the supermarkets’ fortunes and the verdict of Neil Saunders, of retail research agency Conlumino.

TESCO

The business

Tesco first appeared 90 years ago and from the smallest of beginnings on a London market stall it has grown to be the UK’s biggest supermarket and the world’s second-largest retailer.

The figures

Tesco has 3,000 stores in the UK and more than half a million employees. But once-soaring profits have been hammered in the past year.

The past

Tesco seemed an unstoppable force as it became the nation’s shopping darling, expanding into electrical goods, clothing, insurance, banking and more.

The future

The future now looks a lot more uncertain after the boss had to quit and a £263 million black hole in the accounts has just been confirmed.

Verdict

“With the largest market share, Tesco had the most to lose, but its lack of investment has caught up and now it needs to spend a lot of money to refresh and sharpen prices. Doing this when suffering declining sales and margins is a tough ask. It will get better, but not soon and it will never go back to its glory days.”

MORRISONS

The business

The first supermarket opened in 1961 but it only expanded into Scotland 10 years ago after taking over Safeway, then the third biggest chain north of the border.

The figures

The UK’s fourth largest food retailer with 500 stores and 125,000 employees. But latest profits have fallen 51%.

The past

The chain focused on freshness and tradition but was the only big operator not to offer home deliveries until a limited service started with Ocado that doesn’t yet include Scotland.

The future

The company launched an aggressive price-cutting strategy in the summer with thousands of discounts and a loyalty scheme offering to match even discounters’ prices.

Verdict

“What is Morrisons and what does it stand for? These are questions the company has failed to answer and it is suffering as shoppers migrate away to other stores. As the smallest of the Big 4, the future does not look bright for Morrisons.”

ASDA

The business

Formed by a group of Yorkshire dairy farmers in the 1920s. In the 50s and 60s, the Asquith brothers owned five small self-service stores which offered “permanent reductions”. They were a success but needed money to expand and joined forces with those farmers to form ASquith and DAiries.

The figures

Latest figures show a minute rise in sales of 0.6%. Although Asda has 578 stores across the UK, they announced redundancies recently, with 4,100 managers affected.

The past

US giant Walmart took over Asda in 1999. The move helped to force prices down, with Asda proclaiming they were the cheapest place to shop.

The future

Announced a strategy earlier this year to open stores in Asda-free parts of Britain. But has faced criticism for planning to create more part-time posts.

Verdict

“Asda’s continuous and relentless focus on value for money means it has lost fewer shoppers than many of the other grocers and it has also benefitted from many shoppers trading down from other grocers. The biggest plus point for Asda, is that as part of the worlds’ largest retailer, Walmart, it has very deep pockets.”

SAINSBURY’S

The business

Founded 145 years ago by husband and wife team John James and Mary Ann Sainsbury. Started selling own brand products in 1882 and in 1986 became the first supermarket to sell organic products, aimed at attracting more middle-class customers.

The figures

Now has more than 1,200 outlets, including convenience stores. Latest figures released in March announced pre-tax profits of £898 million, a rise of 16%. However, Sainsbury’s execs warned of “challenging times” ahead.

The past

Overtook Asda in 2013, becoming the UK’s second biggest supermarket, behind Tesco. Often thought to be more expensive, but offering quality.

The future

Expect to see more “stores within stores”. Recently did a deal with camera chain Jessops. More in-store branches expected to follow.

Verdict

“Things at Sainsbury’s had been going so well with consistent growth. However, the retailer has now found itself caught in the grocery wars and is suffering from declining sales and softening profitability. The issue for Sainsbury’s is that it does not have the financial strength of Tesco or Asda and may well find a prolonged grocery price war highly damaging.”

LIDL

The business

The first stores opened in Germany in the 1970s and it launched in the UK 20 years ago with their 90th Scottish store recently opening.

The figures

Lidl is now one of Europe’s biggest retailers and UK sales will hit £4 billion this year from its 600 UK stores.

The past

Initially seen as downmarket and the sparse store layout didn’t appeal to many until the recession. Many, including the middle classes in their hordes, turned to it because of the bargain deals and found they liked the quality, too.

The future

Impressive TV advertising campaigns and an expansion into other areas, such as great value clothing, has helped the chain expand and take an increasing share of the market from the big boys.

Verdict

“Like Aldi, the model is focused on value and low prices. However, Lidl is being more creative in its marketing and is creating interest among more affluent shoppers.”

ALDI

The business

Anna Albrecht opened a small store in Germany, in 1914. From there an empire grew with the help of her two sons. However, the sons fell out and the business was split in two. Expanded into Britain in 1990.

The figures

Latest figures show pre-tax profits of £260 million, a rise of 65%.

The past

Seen as cheap and cheerful but downmarket and slightly embarrassing to shop in, with chaotic layouts and a dingy shopping experience.

The future

On the up. On course to open 54 new stores in 2014, with 60 planned next year. This will take total UK store numbers to over 600. The recession saw middle-class customers flock to Aldi.

Verdict

“Aldi also has some very high quality, award-winning products. The two things combined means it offers great value. It’s grown its share of more affluent consumers proving it’s not just for those on a budget.”