Loss Leaders

August 08, 2007 (LBO) – Sri Lanka’s Cargills Food City supermarket chain has announced a month of discounts on a range of consumer goods, including milk powder which has risen sharply in recent days. “What we do is that we compromise our margins to give the best deals for our customers.

The company said it was offering price cuts despite inflation hitting 17.6 percent in July.

There is a severe shortage of milk powder in the world market due to impacts of climate change etc, and as a result, prices are rising globally,” Ranjit Page, CEO of Cargills (Ceylon) Limited said.

“But we have taken a hit on our profitability to reduce Highland Milk Powder by 10 rupees and this is the lowest price on offer in the market.

A 400 gram Highland milk powder pack went up by 20 rupees last week. The brand made in Sri Lanka by state-owned Milco, remains the cheapest in the market, but lags behind heavily advertised imported brands which are more expensive.

Cargills is Sri Lanka’s largest retail chain which has been on an aggressive drive to change the perception that self-service supermarkets were limited to high-end consumers who could pay higher prices.

The offer of discounts