Tesco and its rivals need new ideas to combat Asda’s price guarantee

Asda’s really getting under the skin of its rivals with its promise that its controversial price guarantee scheme is here to stay.

The promotion helped the grocery retailer grow like-for-like sales by 1.6 per cent in its fourth quarter, quite an impressive achievement in a market distinguished by economic gloom and fierce competition in the grocery sector.

Naturally its competitors last year cried foul over the previous scheme, with nine complaints into the Advertising Standards Authority, claiming that Asda excludes a large number of everyday items. Yet while upholding some complaints that related to non-food goods, the ASA allowed Asda to continue running its grocery claims.

In the latest version of the scheme shoppers are refunded £10 if after checking on the price comparison website mysupermarket.co.uk, they find their £100 basket is the same price at Tesco, Sainsbury’s, Morrisons and Waitrose. The scheme covers nearly 15,000 items listed by the website.

It’s notoriously difficult to make price promotions like this work over a long period as the competition inevitably come up with their own under-cutting versions but Asda’s looks as if it has some stickability.

In the last eight months of 2010 one million baskets were compared, around five per cent of Asda’s regular throughput but the scheme is obviously gaining momentum.

It looks as if Tesco, which calls Asda’s claims “rubbish” and its rivals will have to come up with something clever to remove the edge that Asda has clearly found.

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About David O'Reilly

David is a former deputy editor of Campaign and writer for a number of leading titles including Management Today and the Sunday Times. He is a partner in The Editorial Partnership.
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