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Asda offers price guarantee pledge

Asda opened a fresh front in the supermarkets’ new year price-cutting campaigns, pledging to be 10 per cent cheaper than rivals or to refund the difference to customers.

The UK arm of US retailing group Walmart will announce on Thursday that it is improving its price guarantee, introduced last April, to be at least 10 per cent cheaper than rivals.

Its current price guarantee enables customers to check the price of their grocery shop online through independent price checker mysupermarket.co.uk. If Asda is not the cheapest, it refunds the difference, plus a penny.

Under the new scheme, if Asda is not 10 per cent cheaper than all large rivals, it will refund the difference through a voucher to make up the shortfall, which customers can spend at their next shopping trip.

Asda said the upgrade had the backing of Walmart, but it would not disclose the amount that the move would cost. Andy Clarke, chief executive of Asda, denied that the price-cutting would come from extra pressure on suppliers.

He also rejected any suggestion that the scheme was a gimmick or the start of a new supermarket price war.

Clive Black, analyst at Shore Capital, said the move represented “a turn of the screw, but I don’t see it as a price war”.

Mr Clarke said that Asda was cheaper on nine out of 10 baskets of supermarket items compared through the price guarantee, and it was 8 per cent cheaper on those nine baskets.

However, some rivals suggested that customers were looking for cheaper prices in-store rather than through complex promotions, and that the amount refunded through the price checker so far was modest.

Asda endured a torrid time a year ago, hit by a step-up in promotional activity by rivals and a less diverse store format than some of the other big four supermarkets.

Mr Clarke, who became chief executive in May, has worked to revitalise Asda’s performance with measures such as improving the quality of its own-label food.

He told the Financial Times in a recent interview that he was moving away from promotions. Instead, Mr Clarke said Asda was cutting prices on staples, such as milk, bread, sugar and eggs.

Mr Clarke said the new price guarantee reinforced Asda’s commitment to low prices on everyday items.

Asda said all 15,000 products listed by mysupermarket.co.uk were included in the new guarantee, including 7,000 eligible for VAT.

Source : Andrea Felsted - FT.com

06 January 2011
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