business news in context, analysis with attitude

Reuters reports that Tesco "appeared to emerge victorious from a pricing row with Unilever on Friday, with its shares rising 4 percent and analysts saying Britain's biggest retailer had scored a public relations coup by casting itself as the consumer's champion."

As reported yesterday on MNB, Tesco responded to price increases by Unilever in the UK by removing that company's products from its website and threatening that it would remove them from store shelves. Tesco argued that the price increases, which were blamed on a weakening currency that resulted from the Brexit vote (in which the UK decided to leave the EU), were not justifiable; Unilever said they were necessary to offset the higher cost of imported commodities, which are priced in euros and dollars, not the British pound.

Reuters notes that the exact terms of the resolution have not been made public, but that "Unilever had probably at least partially backed down."
KC's View:
Three points here.

First, the Reuters lede reinforces something I said in this morning's 'Eye Opener" - that Tesco "scored a public relations coup by casting itself as the consumer's champion."

Second, it sounds like the coming months could be interesting in terms of UK supermarket competition. Reuters makes the point that "most analysts and economists believe sterling's recent slump - it is down about 19 percent against the dollar and about 16 percent against the euro since the June vote - will lead to higher prices, despite fierce competition between supermarkets." Which is interesting, since traditional retailers in the UK have seen their market shares fall consistently in recent years because of the impact of discounters such as Aldi and Lidl. The question then is, what will happen if prices start to go up across the broad.

Finally, I have to wonder - and I do not have the answer to this - if the same thing would happen in the US if we were to take a Brexit-like approach to the global economy. Will all our prices go up? Just asking...