Tesco , Britain's biggest food retailer, warned on Thursday its profit would likely fall this year as it set aside cash to deal with a step up in the "competitive intensity" of the market, sending its shares down over 6%.

Several supermarkets saw share prices fall on Thursday. Tesco's dropped by 6% while rival Sainsbury's fell 4.8% and Marks & Spencer traded 2.6% lower. Last month, Asda's executive chairman Allen Leighton said the supermarket would aiming for its prices to be 5% to 10% cheaper than its rivals in the future in an attempt to win back customers.

Tesco’s cost cuts can’t offset shrinking U.K. margins, as pricing turns more competitive in a tough market. Find out why TSCDF stock is a hold.