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Mannings, Watsons in expensive price war

PUBLISHED : Saturday, 02 August, 2003, 12:00am
UPDATED : Saturday, 02 August, 2003, 12:00am
 

A price war erupted yesterday between Hong Kong's two biggest drug store chains, with Mannings undercutting Watsons' prices by 20 per cent after its rivals had announced a sweeping retail strategy promising a 'lowest-price guarantee'.


Watsons had said it was offering the lowest prices on more than 1,400 items in an attempt to restore consumer confidence.


But a tube of Nivea sunblock lotion, costing $77.90 in Watsons, is now being offered at $62 in Mannings.


As part of its promotion, Watsons said it would give a 'double-the-difference' refund if any customer found one of its guaranteed lowest-price products was offered more cheaply anywhere else.


Caroline Mak, Mannings' chief executive officer for Greater China, said the chain would also be launching a one-day promotion next week, giving away gifts worth $2.5 million.


But she denied the moves were in response to its rival's pricing strategy.


'All our promotional activities were planned months ago and we did not know about our competitor's new campaign,' she said. 'We definitely do not want to see a price war.'


But she said the chain would not adopt a lowest-price strategy, saying it was difficult to deliver on the promise.


While Ms Mak said the campaign would cost Mannings about $75 million, Watsons said it would pour about $85 million into its lowest-price campaign.


Andrew Miles, Asia chief executive officer (health and beauty) of the A S Watson Group said he hoped the campaign could boost its sales by 10 per cent.


He played down any pressure on its margins caused by the campaign.


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