Asda is a long way off its pledge to offer baskets 10% cheaper than its rivals, figures from The Grocer 33 have revealed.
Announcing new and improved terms on its Asda Price Guarantee this week, CEO Andy Clarke said if its baskets were not 10% cheaper than at Tesco, Morrisons, Sainsbury's and Waitrose "we'll put our hand in our pocket and give [our customers] back the difference".
Asda claimed it was already 8% cheaper than its rivals prior to the pledge. However, The Grocer 33 suggests otherwise. Over the past eight weeks, Asda only once managed to offer a basket at least 8% cheaper than all its rivals. On average, it was just 1.3% cheaper than the nearest rival.
Sometimes it's been more expensive than at least one rival, including, ironically, this week, when Asda came third on price, trailing behind both Morrisons and Sainsbury's.
Tesco branded Asda's claim to be 8% cheaper as "utter rubbish". "A direct comparison taken on Tuesday of the best prices on the 100 top-selling matched lines shows that Tesco is 5% cheaper," a spokesman said.
Morrisons group commercial director Richard Hodgson agreed that the difference between Asda and its rivals was far smaller than 10%. Describing the guarantee as a "gimmick", he told The Grocer: "When I was at Waitrose, I could have manipulated a basket to be cheaper than Asda."
But Asda chief marketing officer Rick Bendel insisted it could back up its claims: "People who make claims about promises should be held accountable if they break them. The Asda Price Guarantee is the first real accountable price promise in retail."
And Verdict analyst Matt Piner added the guarantee was a powerful marketing tool for Asda. "In reality very few customers have actually taken the time to check Asda's price promise. This will rise now the company has increased its promise to 10%, and the scheme will obviously become more expensive to enforce. Asda is no doubt gambling the majority will be reassured their shopping is cheaper without actually taking the time and effort to check and reclaim any savings."
The move, an extension of the Asda Price Guarantee launched last April, has the full backing of Walmart. "This is Bentonville saying 'you know what, we're behind in market share, here's some money to go and buy some'," added an industry source.
Asda vows to beat rivals by 10% in extended Price Guarantee (6 January 2011)
Is price guarantee a bluff or did Asda just play a blinder? (1 May 2010)