Industry analysts have branded Asda's Price Guarantee ineffective after the supermarket reported a mere 0.6% increase in full-year sales.
Despite like-for-like sales in the fourth quarter increasing by 1.6% and Asda narrowly outperforming the market, analysts were unimpressed by the return generated by the heavy investment in its price pledge. Asda launched its original Price Guarantee in April last year and last month followed it up by promising to be at least 10% cheaper than its rivals.
"Asda has probably spent the equivalent [of their sales increase] on above-the-line messaging just to get their advertising out there," said Gemma Lovelock, UK MD at TLC Marketing Worldwide.
"The Price Guarantee will have helped, but at best these results can only be seen as a reasonable starting point given the level of investment," said Neil Saunders, an analyst at Verdict. "If Asda don't see 2% or 3% growth figures over this year that will raise big question marks."
Added another analyst: "I would not have been impressed with 0.6%. And no one is mentioning how much it is costing them to keep the campaign running and to offer refunds."
Asda's growth was more likely down to consumer fears over the economic climate, analysts suggested.
"If anything, the increase is down to people saving money by eating out less and upgrading their supermarket spend to include premium home ranges," said Lovelock.
Asda's Extra Special range was the fastest growing premium brand in the market in Q4, it claimed.
But the "sluggish" retail market in general would have also boosted Asda, said one City source. "It is more an indication of the state of the market than a measure of Asda's success," he said. "Asda is at the high end of its peer group, but it does well in times of high inflation. When inflation drops off, it does badly."
CEO Andy Clarke claimed the Price Guarantee was a "fantastic mechanic" and a "game changer", with 800,000 customers comparing prices since the January relaunch and 170,000 downloading the iPhone app. The publicity generated by Asda's new 10% cheaper claim had also helped, he claimed, with rivals "spending millions advertising someone else's campaign".
But analysts said the most important indication of success for Asda would come within the next few months. "The effectiveness of phase two of the Price Guarantee will be better understood when first-quarter results are revealed," said Darren Shirley, an analyst at Shore Capital. "I would expect it to perform better than its predecessor."
Asda is also launching Elegant Living, a premium homeware brand jointly sourced with Walmart.
Despite like-for-like sales in the fourth quarter increasing by 1.6% and Asda narrowly outperforming the market, analysts were unimpressed by the return generated by the heavy investment in its price pledge. Asda launched its original Price Guarantee in April last year and last month followed it up by promising to be at least 10% cheaper than its rivals.
"Asda has probably spent the equivalent [of their sales increase] on above-the-line messaging just to get their advertising out there," said Gemma Lovelock, UK MD at TLC Marketing Worldwide.
"The Price Guarantee will have helped, but at best these results can only be seen as a reasonable starting point given the level of investment," said Neil Saunders, an analyst at Verdict. "If Asda don't see 2% or 3% growth figures over this year that will raise big question marks."
Added another analyst: "I would not have been impressed with 0.6%. And no one is mentioning how much it is costing them to keep the campaign running and to offer refunds."
Asda's growth was more likely down to consumer fears over the economic climate, analysts suggested.
"If anything, the increase is down to people saving money by eating out less and upgrading their supermarket spend to include premium home ranges," said Lovelock.
Asda's Extra Special range was the fastest growing premium brand in the market in Q4, it claimed.
But the "sluggish" retail market in general would have also boosted Asda, said one City source. "It is more an indication of the state of the market than a measure of Asda's success," he said. "Asda is at the high end of its peer group, but it does well in times of high inflation. When inflation drops off, it does badly."
CEO Andy Clarke claimed the Price Guarantee was a "fantastic mechanic" and a "game changer", with 800,000 customers comparing prices since the January relaunch and 170,000 downloading the iPhone app. The publicity generated by Asda's new 10% cheaper claim had also helped, he claimed, with rivals "spending millions advertising someone else's campaign".
But analysts said the most important indication of success for Asda would come within the next few months. "The effectiveness of phase two of the Price Guarantee will be better understood when first-quarter results are revealed," said Darren Shirley, an analyst at Shore Capital. "I would expect it to perform better than its predecessor."
Asda is also launching Elegant Living, a premium homeware brand jointly sourced with Walmart.
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