Asda is vowing to undercut rivals Tesco, Sainsbury’s and Morrisons by as much as 50%.
The new everyday low price pledge would make Asda cheaper on around 2,300 selected “everyday” branded and own-label lines compared to its traditional big four rivals, including on loyalty prices, the supermarket said.
On relaunching Asda Price a year ago, chairman Allan Leighton vowed to make Asda 5%-10% cheaper than its main rivals. He is now laying down the gauntlet in a renewed price offensive in a bid to taper Asda’s market share decline and breathe new life into his turnaround plan.
Directly naming its competitors in marketing and PoS signage, Asda would be “lower” on selected fresh meat, fresh produce, chilled, core grocery and bakery lines compared to the current loyalty prices offered by rivals.
It includes products such as Warburtons Tiger Bread, which is 25p (15%) cheaper than at rival grocers at £1.40; Ariel The Big One Pods, which are £6, 50% cheaper than rival prices; and Asda Everyday Teabags, which are 22% cheaper than rivals, at £2.50.
All prices are compared to the current cheapest price at Asda’s “nearest priced competitor”. Asda does not directly name which of the three rivals it is referring to for each line.
The guarantee means families can shop at Asda safe in the knowledge “they are paying less on the items they buy week in, week out, without needing to sign up to multiple loyalty schemes or wait for special offers elsewhere”, Asda said.
“We know many families are feeling the pinch post-Christmas and it can be difficult to get household budgets back on track,” said Asda chief customer officer Rachel Eyre.
“We want to help by giving them the lowest prices on the products they buy the most. Asda Price means great value with clear and consistent pricing which is available to everyone without the need for a loyalty card.”
While Asda is taking a clear step away from loyalty pricing, the new commitment comes alongside a push to drive shoppers to its Asda Rewards loyalty programme, with the offer of 10% cashback on any fresh produce purchased in store throughout January.
Asda has regained price position, but shoppers yet to return
Leighton has hinged his turnaround plan on pulling shoppers back to store by restoring Asda’s DNA of being the cheapest supermarket in the sector.
Thousands of products have passed through its Rollback price cuts to sit at a permanent Asda Price over the past year. In December Leighton said Asda had achieved between a 4%-7% gap with its direct competitors. It also regained its title as the cheapest grocer in the G33 price comparison last year.
Rivals have responded with price cuts of their own, however the fears Rollback could spark a grocery price war are largely yet to materialise, leading analysts to question whether heavily indebted Asda is hedging its turnaround too heavily on price, which is yet to lead to an improvement in volumes.
Following the disastrous bungling of its Project Future programme to decouple its systems from Walmart last summer, which delayed Leighton’s turnaround plan by six months, Asda was the only supermarket to see sales decline over Christmas.
Sales dropped 4.2% in the 12 weeks to 28 December according to the latest data from Worldpanel by Numerator. Its market share sits at 11.4%.
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