Fears of a price war between supermarkets and discounters yesterday saw around £2bn wiped off the combined value of Tesco, Sainsbury’s and Morrisons shares.

Share prices were hit after Morrisons announced a £176m loss for 2013, compared to a profit of £879m in 2012-13. The retailer blamed increased competition from the discounters for the “disappointing” results and announced a plan to invest £1bn over the next three years to lower prices and expand its presence in online and convenience.

Morrisons’ shares fell 12% from 233p on March 12 to 205p at the close of play  yesterday. Tesco’s shares also dropped from 315p to 298p and Sainsbury’s saw nearly 10% wiped off the value of its shares, as they fell from 334p to 304p.

Fundamental shift

Speaking to analysts yesterday, Dalton Philips, Morrisons chief executive, said: “There has been a fundamental shift in how consumers view discounters. Consumers are no longer going to discounters out of necessity. The rules of the game have changed. There is a new price norm.”

On her financial blog, Louise Cooper, independent analyst, said: “The big four are still lagging behind the changing market conditions. Morrisons is only just catching up with the developments of five to 10 years ago – online, loyalty card, convenience etc – let alone the changes happening now.”