Half of Asda’s price cuts ‘worth just 1p an item’

More than half of the 5,000 price cuts promised by the supermarket group Asda are only worth a penny an item, according to research by the Grocer magazine.

The retailer announced last week that it would cut a further 5,000 prices by Easter, bringing to 12,500 the number of items that have been reduced. It said this was part of a new transparency in its pricing policy that would give customers “value they can trust”.

But the Grocer 33 shopping basket database, which monitors several hundred items across 12 categories, found that while more than a fifth of the Asda items it monitors did fall in price, half of those items were cut by only a penny.

Conversely, it said, fewer than one in 10 of the items at Asda that increased in price rose by only a penny.

Kay Staniland, head of the consultancy Assosia, said: “Having reported last week that it was dropping bogofs [buy-one-get-one-free] in favour of being transparent in its price cuts, such small cuts could be seen as simply trying to retain the cheapest title rather than passing on any real savings to the consumer.”

An Asda spokeswoman said it counted price cuts of 1p in its total but insisted that the company offered good value.

“While it’s fair to say some of our products have come down by a few pennies, overall, since the start of the year, products reduced in price have come down by 11% on average.

“As the Grocer 33 shows, week in week out we are the undisputed price leader. That’s why by Easter we will have 12,500 prices net since January 1 with dozens of deep rollbacks on the way.”

The Grocer said Asda had had the cheapest basket in its weekly survey for all nine weeks of this year and has the lowest average price of the surveyed retailers. But, in common with the big four supermarkets – Tesco, Sainsbury’s, Morrisons and Waitrose – Asda’s prices have risen this year, it added.

Food price inflation is currently running at about 10% because of the weak pound, which pushes up import prices, and last year’s strong global commodity prices.

Published in The Guardian, 09 March 2009

http://www.theguardian.com/business/2009/mar/09/asda-price-cuts