Asda may be losing the quality message with its relentless drive to be seen as having the lowest prices, one analyst has warned.
Kantar Worldpanel director of communications, Ed Garner, said the Leeds-based retailer had “hidden the quality message” in the aftermath of the announcement of its latest scheme, the Price Guarantee.
Its new initiative sees the supermarket offering to refund the difference on baskets of shopping not at least 10 per cent cheaper at Asda.
Garner said similar Asda initiatives had seen take up of just 0.2 per cent but added the move represented a “clear statement of its position as the cheapest supermarket”.
He told FPJ: “They are so strong on price they have hidden the quality message. Because they are the second largest UK grocer they should have a message for everyone. If you look at Tesco, it has covered all bases and there’s something for everyone.
“Asda has been banging on about value and that has eclipsed quality.”
One source said the move could have repercussions for supermarket supply bases. “The trouble is when Asda drives for low prices Tesco follows them. In my view, Tesco’s strategy is reactive rather than proactive and by just following Asda they may be putting pressure on suppliers that doesn’t exist at Asda as they have budgeted for bringing prices down.
“Asda’s margin aspiration is a lot smaller than Sainsbury’s, Tesco’s or The Co-operative’s so they can afford to be cheaper. In the last six months, Sainsbury’s has completely stepped back from the price war deliberately.”
Garner added: “Asda has a very good PR department and can take the initiative. They will seize an opportunity to be the first in cutting prices to spin it their way.”
A spokesperson for the BRC said: “There’s no question that there’s a huge competitive battle for business going on between the major grocery retailers. All of the major retailers are offering discounts and slugging it out for every penny they can get.”
Last April, Asda offered to refund customers the difference between products bought at its stores and those from cheaper rivals plus 1p.
No comments yet