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Asda hits out at rivals 'price gimmicks' as sales slide

Asda has launched a ferocious attack on its supermarket rivals, accusing them of being "desperate" and misleading customers with price gimmicks.

One of the company's most senior executives, Barry Williams, said Asda's traditional rivals were feeling "chirpy, chirpy not cheap, cheap" by pledging to deliver price cuts and then not sticking to them.

Mr Williams, the chief merchandising officer, said that Tesco, Sainsbury's and Morrisons were relying on issuing money-off vouchers to boost sales.

He accused Bradford-based Morrisons, in particular, of relying on vouchers such as £5 off fresh fruit and vegetables. Mr Williams said that Sir Mervyn King, the Bank of England Governor who oversaw the Quantitative Easing money-printing programme, was "alive and well in Bradford". He added: "In my 25 years in the industry I have never seen vouchers like these."

The "Big Four" supermarkets are battling against a once-in-a-generation shift in shopping habits from the out-of-town supermarket to a range of shopping channels, also including online, convenience stores, and the discounters.

Asda triggered a price war in the industry a year ago by warning of the radical change and committing £1bn to lowering prices over the next five years.

Tesco, Sainsbury's and Morrisons have publicly committed hundreds of millions of pounds to lowering prices in an attempt to fightback against the growing popularity of the discounters Aldi and Lidl. Morrisons, for example, has said it is investing £1bn over the next three years to lowering prices.

However, asked if Asda's rivals were misleading customers by announcing price cuts and then not holding them, Mr Williams said: "Absolutely. We have the data and we can see it."

Asda was speaking as the company, which is owned by Walmart, reported a 1.6pc fall in like-for-like sales for the third quarter of the year.

This is the first time this year that sales have fallen for Asda, but Britain's second biggest retailer is still significantly outperforming its rivals.

Andy Clarke, chief executive, said that it had been a "tough quarter" for the grocery industry.

He claimed that "gimmicks are re-entering the market", despite pledges by the company's rivals to cut promotions and focus on consistently lower prices. Mr Clarke said that Asda will "not be joining the gimmick game".

He added: "I am not going to be distracted by gimmicks in the market. Some of the gimmicks are changing shoppers' behaviour. But printing £5 notes is a short-term strategy."

Despite the fall in sales for Asda, its online grocery sales grew by almost 20pc as increasing numbers of customers use the retailer's click-and-collect points. Asda wants to have 600 click-and-collect points, including at petrol stations and London Underground stations, by the end of 2014.

Mr Clarke said: "The last quarter has seen a shockwave go through our industry and others are starting to respond to the challenges they face. I expect that we will see another tough quarter and I'm under no illusions that the battle continues to rage.

"A new reality is upon us and although we were the first to adapt, we need to do everything to remain ahead of our traditional competitors whilst removing reasons for customers to go to the small discount shops.

"That's the strategy we are on and we need to keep accelerating it.

"We won't be knee jerked into reacting to short-term tactics. Vouchers can win quarters, by strategies win decades."

Source: Graham Ruddick - The Telegraph.

Read the full news article here.

16 November 2014

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