Asda goes for Aldi and Lidl!
The two chains that seem to have had the worst Christmas, Morrisons and Asda, have already reacted with price initiatives.
Morrisons' reaction is unoriginal: on Wednesday they announced a new wave of price cuts on essential products. They invest £15 million in reducing an average of 20% of around 200 references. In addition, 1,000 references will maintain the price for the next 8 weeks, regardless of how inflation behaves, so that their customers have confidence that buying at Morrisons will not be more expensive for them.
Asda's is somewhat more original, although incremental rather than innovative, like many things in mass consumption. If until now we had chains like Tesco and Sainsbury's that promised to have a series of essential references at the same price as Aldi, Asda doubles the bet and says that it will have about 300 references at a lower price than the cheapest of the two discounters, Aldi or Lidl. . The products will change every week, and are distributed throughout the entire assortment, fresh, refrigerated, ambient and frozen, and the entire hygiene, cleaning, home, etc. assortment. The average price of the items in question is reduced by 17%. The message that Asda wants to give here is that there is no need to stop buying certain products in its stores, that customers can make the entire purchase at Asda because it has the same prices as a discounter and the brands that customers want.
At the same time as this campaign, they have price campaigns, such as Price Drop and Rewards (the one associated with the loyalty card, and which allows customers to accumulate discounts), and quality ones (the fruit and vegetable campaign). , and the one from the Marks & Spencer Taste Test, where they say that their MDD products are better than those from Marks & Spencer, and much cheaper!).
While, during the month before Christmas, the market grew by 6.9%, Asda's sales grew by half, 3.4%, and those of discounters did so much faster. It was to be expected that they would react, and surely this initiative had already been prepared for some time, launching it in the month of January, where price sensitivity is greater. Many analysts say that the effort made by Tesco and Sainsbury's with their initiative to match prices with Aldi has had a certain positive effect, and has also been accompanied by many other initiatives.
If we compare the quotas from a year ago with those from now, the discounters are closing the gap with Asda. The chain is the third in the country, while Aldi is the fourth with 4.3 points less share (cutting 0.7 in one year). Lidl is fifth and is further away, but it cuts it faster; now it has 5.9 points less quota (and has cut 1.1 in a year).
We'll see what else Asda has in store to convince customers not to go to other brands.
