ASDA Reduces Price Gap On Discount Grocers

asdahqAs the second biggest grocer in the UK, only coming in behind Tesco, ASDA has beat its major rivals with a modest rise in underlying sales as well as announcing that it is narrowing the price gap with discounters.

The firm, which is based in Leeds, reported a 0.5% rise in like-for-like sales in the 10 weeks leading up to 30th June in a very competitive grocery market, which is currently suffering from the slowest growth in a decade.

The reported results is an improvement on the performance in the first quarter, when the rise in like-for-like sales was just 0.1%. ASDA is currently outperforming its arch rivals, Tesco and Morrisons, who have both issued profit warnings after a decline in underlying sales

Andy Clarke, ASDA’s Chief Executive said that the differences in price between ASDA and German discount retailers Aldi and Lidl is narrower than it has ever been. He said

According to The Grocer magazine, two weeks ago our price basket was lower than the discounters. We’ve halved the price differential with the discounters. We don’t have parity yet.

Mr Clarke also pointed out that the discount retailers have only got around 2,000 products on offer, whereas ASDA has around the region of 20,000. He added

The long game is our format will win. We will narrow the gap with the discounters and broaden it with the supermarkets.

Complaying with the ASDA Price Guarantee, the company makes the promise to be 10% cheaper than its major supermarket rivals or customers will be given their money back. ASDA was the first out of the four big retailers to combat the threat of discount retailers by reducing its own prices. As of last November, it made a promise to spend one billion pounds on lowering its prices during the course of the next five years.

After the move from ASDA, Tesco and Morrisons have since followed suite, with Sainsbury’s saying it will continue to remain competitive.

Mr Clarke went on to add that he expects the economy will remain challenging with a “two-stage recovery” which depends on where people reside in the UK. He said

It feels very different if you are in London to Northern Ireland and the North East. If you are a family on a budget in those difficult regions it still feels very challenging. There is undoubtedly a two-stage recovery which is why our strategy is working.

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