The supermarket price wars escalated yesterday as Asda slashed the cost of 1,500 items by as much as 45 per cent.
In the latest attempt by Britain’s third-largest supermarket to win back shoppers, new boss Allan Leighton cut the prices of staples such as Clover butter and Cathedral City cheese.
He said he planned to ‘continue to invest in lowering prices across the rest of the year and beyond’.
The latest reductions mean the group, which has shed customers since its private equity takeover in 2021, has cut prices on almost 10,000 products – a third of its range – since the end of January.
But analysts said the cuts are a gamble given the higher costs businesses face after the Budget. Jonathan De Mello, founder of JDM Retail, said: ‘Asda has started yet another price war in the ultra-competitive UK grocery sector – a zero-sum game which will damage margins.’
Describing it as a ‘risky strategy’, he said maintaining profits would be ‘paramount’ given higher National Insurance contributions and inflation-busting increases to the minimum wage.
Fighting for survival: The latest reductions mean Asda has cut prices on almost 10,000 products
A report by Shore Capital underlined the challenge facing Leighton, who returned last year having been chief executive from 1996 to 2001.
After a visit to stores on Merseyside, analysts at the broker noted ‘quite awful’ standards and said one site was ‘dirty and, quite frankly, a mess’.
Clive Black, a retail expert at Shore Capital, told the Mail yesterday: ‘Asda’s woes are not just about its value perception and pricing messaging, it also needs to improve the shopping experience.’
The latest price cuts come after Leighton, Asda’s executive chairman, last week admitted ‘regaining customers’ trust will take time’. Once Britain’s second-biggest supermarket, it has been flailing since the Issa brothers Mohsin and Zuber and private equity giant TDR Capital bought it in a £6.8billion debt-fuelled deal in 2021.
Asda sales last year were ‘disappointing’, Leighton admitted last week, as it reported revenue dipped 0.8 per cent to £21.7billion in 2024.
The supermarket has yet to hire a chief executive and there is no formal recruitment process under way.
Leighton has dismissed talk that Asda has been unable to fill the role because nobody wants the job.
After he fired the starting gun on a price war last week, the value of shares in Tesco, Sainsbury’s and Marks & Spencer tumbled in anticipation of cuts across the sector.
The three listed grocers are worth a combined £3.9billion less than they were a week ago as the prospect of war between grocers spooked investors.
Asda’s slice of the market has tumbled from 13.7 per cent to 12.6 per cent in the past year.
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