UK: Asda takes aim at discounters with price cuts

By Dean Best | 2 January 2014

Asda plans to invest GBP1bn in lowering prices over next five years

Asda plans to invest GBP1bn in lowering prices over next five years

Asda has set its sights on luring UK shoppers away from the discounters with moves to sell a range of household items for GBP0.50.

Bread, porridge and soup are among the lines being sold for GBP0.50 as part of Asda's bid to stem a decline in its market share.

Asda - along with the rest of the UK's five largest grocers - have seen their market share fall in recent weeks, in part at the expense of the discount retailers operating in the country.

"We are offering more value than ever before across our stores on the products that people actually week in, week out. With hundreds of products at 50p, we're even making the Poundshop and Aldi look expensive," Barry Williams, chief merchandising officer for food at Asda, said.

According to the most recent market share data issued by Kantar Worldpanel, German giant Aldi and Lidl were enjoying a record share of the UK grocery market.

In the 12 weeks to 8 December, Aldi accounted for 4% of the market, while Lidl retained its record share of 3.1% which it reached during the summer.

The Kantar Worldpanel figures, which includes the impact of store openings, also showed over half of the UK's households had visited either an Aldi or a Lidl during the period - the first time a majority of the country's homes had frequented one of the discounters.

The products on sale for Asda at 50p include Associated British Foods' Kingsmill bread and Cadbury twinpot desserts.

Asda's cuts are part of a GBP1bn investment the retailer plans to make in lowering prices over the next five years.

The retailer, the UK arm of Wal-Mart, said in November it wanted to "widen the gap" with its big three rivals, Tesco, Sainsbury's and Morrisons.

The Co-operative Group, the UK's number five grocer by sales, today launched an agressive price promotion in a bid to tackle its declining market share.

Show the press release

ASDA KICKS OFF THE YEAR WITH IT’S BIGGEST EVER VALUE CAMPAIGN

 

·         £50 million to be spent in the first quarter of 2014 on reducing prices across own label and branded food

·         Asda lowering the prices of fresh produce, bakery, meat, fresh fish, frozen food, yoghurts, butter, cereal and baby and toiletries meaning customers can benefit from lower prices across everyday essentials.

·         Price cuts form part of supermarket’s five-year strategy to invest £1 billion in price and £250 million in quality

 

2nd January 2014 - Asda has today announced that it will be investing £50m in price cuts in the first quarter of this year alone to help customers after Christmas. The supermarket will embark on its biggest ever January ‘value’ campaign though a number of price cutting initiatives as it looks to further widen the price gap to the market.

 

The move, the first part of a wider £200m price investment this year, will go into locking down the price of the biggest selling items like bread, fruit, vegetables, meat, fish cereals, nappies and toiletries as it looks to cement its position as the UK's leading value retailer.

 

 Barry Williams, Chief Merchandising Officer for Food at Asda said:

 

 “It goes without saying that Christmas can be a struggle financially and when you look at the way people have reacted to the sales, it’s more clear than ever that UK shoppers’ priorities are well and truly focused on price.

 

“That’s why, this January, we are offering more value than ever before across our stores on the products that people actually week in, week out. With hundreds of products at 50p, we’re even making the Poundshop and Aldi look expensive.”

 

The investment  - an increase of £70 million on the £130 million it spent on price investment in 2013 - will be used to slash the price of Asda’s successful own label ranges, as well as branded goods.

 

Earlier this year, Asda launched its Price Lock campaign – a commitment to keeping down the price of essential items such as milk, bread, peppers, pasta and grapes. The price of 2 litres of milk, for example, has been locked at £1 for over a year with more price locked items expected to be announced in the next few weeks.

 

In November, the retailer announced that it will be investing £1 billion in lowering prices and £250 million in quality, style and design over the next five years. It will also be giving more people the opportunity to shop with Asda through the physical development of stores and over 1,000 Click and Collect locations.

 

This January will see campaigns focused on bakery, produce and fish with new quality improvements highlighted. French flour will be used in baguettes and extra fruit will be in scones but customers will only pay 50p. Broccoli, cabbage, cauliflower, Iceberg lettuce and spring onions will be amongst the produce on offer at 50p as well as cupboard staples including Kingsmill bread, pasta, Heinz soup, WeightWatchers soup, porridge, biscuits, tinned tomatoes and Dairylea Triangles.

 

150 cleaning products will also be rolled back as shoppers clean up after Christmas and try to get their house back to normal. Products like Flash Gel, Domestos and Comfort will all be £1.

 

Barry Williams, Chief Merchandising Officer goes onto say:

“Last year we reiterated our commitment to bringing value retail to UK consumers by investing our greatest ever sum in price and quality.  Our decision to spend the first £200m of this in 2014 is further proof that we are fully committedto lowering prices, significantly widening the price gap to the market and continuing to close the gap to the discounters.

He added: “When customers shop at Asda, they want to know that they are always getting the best quality products at the lowest prices. The investments we are making in price mean we can guarantee to be 10% cheaper than the competition, day in day out. We won’t achieve this through confusing vouchering schemes or other price gimmicks but through simple and honest pricing and significant and lasting investment.”

The investments Asda is making in price and quality will be funded through savings generated by Asda’s continuing “We Operate For Less” programme, as well as through the global leveraging power it has with parent Walmart.

The price offensive will be supported by an extensive above the line campaign – including TV, print and radio slots – by VCCP Blue and Asda will take part in the Change4Life ‘Smart Swaps’ campaign with healthy alternatives on offer for as little as 75p.

 

 

ENDS

Original source: Asda

Sectors: Bakery, Cereal, Chilled foods, Dairy, Fresh produce

Companies: Associated British Foods, Asda, Sainsbury’s, Tesco, Morrisons, Aldi, The Co-operative Group, Cadbury, Lidl

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