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Morrisons move to start a "bloody war" in UK retail

Supermarket's half-price promotion could send shockwaves through the market

Morrisons' move earlier this week to offer videogames for up to half price has been described by one analyst as "The opening salvo is what could turn out to be a very bloody war".

Although the Morrisons promotion is only initially set to run for a week, if successful it could run for longer, and Altium Securities' David O'Brien believes that could have repercussions for other retailers, reports The Guardian.

"Game Group has a price promise and as a result will be forced to match the levels offered by the food retailer," he said in a sell note.

"We think it highly likely that other retailers will follow suit in the run-up to Christmas, resulting not only in Game Group being forced to price match but also to increase its promotional spend in the press and on TV.

"Our expectation is that little help will come from hardware sales, as Microsoft has just reduced the entry price of the Xbox 360 to USD 199 (GBP 115), with Sony likely to follow suit.

"We think the above combination is likely to result in a reining in of profit estimates closer to Christmas."

Game's share price has fallen from 259.75 pence at the close on Monday to 243.50 pence at the time of writing, a total drop of just over 6 per cent. has contacted the Game Group for clarification on whether or not it is bound to honour its price promise with respect to the Morrisons move.

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