Asda Stepping Up Its Fight Against The Discounters

Asda has reportedly told suppliers that it wants to reduce its product range and focus more heavily on its everyday low prices (EDLP) strategy in order to fight back against Aldi and Lidl.

According to trade publication The Grocer, the retailer outlined the move at a recent supplier conference. A presentation said Asda planned to achieve “SKU reduction, not sales decline” with “increased volume to drive operational efficiencies for Asda and suppliers”.

It added: “Price is our number one strategic imperative aligned to our discount platform ambition. We will be increasingly choiceful in the areas that matter most for our customers.

“Asda has an opportunity to disrupt the market via discounter prices and a relevant range of products and convenience services under one roof.”

The report by The Grocer highlighted that suppliers were doubtful that Asda’s new strategy would work. One supplier source is quoted as saying: “This is a message we’ve have heard many times before. Despite all their intentions, I don’t believe that any of the big four are able to make an EDLP strategy stick. The fact remains that you can’t out Aldi, Aldi.”

Another supplier added: “What they are saying now is that they are going to down fully EDLP but I’m not so sure they can do it. What is an Asda store going to look like if it is fully EDLP? I would say that is a pretty boring experience for a shopper, and are they really going to get better prices than at the discounters?”

It is not known whether the move will be fully implemented following Friday's announcement that the Issa brothers and TDR Capital have agreed to buy Asda from Walmart in a ￡6.8bn deal. However, the new owner said they planned accelerate Asda’s existing strategy and invest over ￡1bn over the next three years to strengthen the business and its supply chain.

Tesco recently started to move towards an EDLP strategy as all the main grocers gear up for a major price war amidst fears of a lengthy recession caused by the pandemic. The Big Four multiples want to ensure that Aldi and Lidl don’t gain the price advantage that accelerated their growth following the 2008/9 financial crisis.

Last week, Aldi’s Chief Executive Giles Hurley took a subtle swipe at Tesco’s recent price campaigns, saying shoppers “see through marketing tricks and gimmicks”, and adding: “More expensive supermarkets can only imitate, not replicate, what we do.”

NamNews Implications:

• ‘reduce its product range and focus more heavily on its everyday low prices (EDLP)…’
• …and that before the brothers take a seat.
• “SKU reduction, not sales decline”
• with “increased volume to drive operational efficiencies for Asda and suppliers”.
• but, “you can’t out Aldi, Aldi.”
• That was before Friday’s takeover.
• Add the fact the mults were able to sell at normal prices (i.e. few promos) for four lockdown months…
• …we are now headed into the longest, deepest, well-funded EDLP session…
• …within the longest, deepest recession the UK has ever seen.
• Watch this space…