Is Asda leading the way in honesty?

Like most consumers, supermarket price wars
leave you confused as to who really is the cheapest but Asda have trumped the
others with the launch of its new price guarantee website. It’s both a clever
initiative but also a gamble.

 

It could save them millions in TV ads if it
takes off and establishes the brand firmly as the best value supermarket but it
also commits them to constantly outsmarting the others. The Asda site compares
a basket with Tesco, Sainsbury and Morrisons, I doubt they’d dare compare to
Aldi, but claims Asda will come out best on 96% of baskets. Personally my
experience of Asda is my basket price has been cheaper.

 

This is one of five initiatives the Walmart
owned brand are launching to position the brand as a price-plus player. Tescos
and Sainburys have both turned in massive profits recently and the competition
for the pound in our pocket is certainly benefiting us financially, especially
if you are a student and living off pizza and lager. The World Cup will see a
big price fight on booze.

 

Tesco and Asda are already involved in
aggressive loss leader beer discounting, Tesco has a £10 deal selling many
brands for less than 50p a can while Asda have gone for a £9 deal. With the
World Cup still 6 weeks away this may well be causing concerns with those
already concerned about Booze Britain.

 

Of course a price war isn’t always good for
suppliers as supermarkets are in the profit game not providing a social
service. The Action Aid “Who Pays?” campaign of several years ago challenged
the supermarkets to be transparent about who was paying for the discounts. Of
course it was the suppliers and that was passed down to third world farmers.
The campaign was very successful in it actually forced supermarkets to change
their ways. Sainsbury was quick to take the hit on bananas and highlighted the fact
in their ads.

 

You also have to question how, when
supermarkets charge 2.5 times cost price, they can buy some products so cheap
without exploitation. A recent report by the Committee on Agriculture &
Rural Development calls for better prices for farmers. Not surprisingly it’s gone
done like a lead balloon with supermarkets who have criticised it for being one
sided.

 

As the recession hit hard we saw the Aldi
effect as middle class shoppers jumped in their MPVs and headed for Aldi, Lidl,
Iceland and Netto but it seems as confidence returns so shoppers are returning
back to the major supermarkets, a drop from 12% to 7% of shoppers buying
bargain basement food.

 

And finally a word about the decline of
Organics. The Soil Association has done a great job of positioning Organics as
a quality badge, getting consumers to see it as premium price product that
tastes better. Our own research (over 1000 shoppers) proved few were buying it
for ethical reasons, it’s posh food for wealthy middle class shoppers. Which
was great as retailers creamed in the profits until the recession hit and sales
plummeted 12%. Of course it didn’t help that a government backed report claimed
that many organics tasted no better than non organics. The Soil Association and
a number of organic suppliers are fighting back and plan to use an ad campaign
to win back consumers. The usual blind hope that advertising is a magic wand to
solve what is a complex strategic marketing problem. Best of luck to them.

 

Of course some Organic categories are still
growing, meat and kids. Ella’s Kitchen have seen massive growth, 174% last
year, as mothers are moving towards organics for their kids because of the
appeal of purer, more natural chemical and additive free products.

 

Firstly I’d get the price down, that’s the
key reason they lost sales. Second I’d highlight chemical free (though that’s
not actually true). And third I’d design a decent logo, the Organic logo is the
worse logo of all time, the Tesco’s one is more on the mark. I can not
understand why the Soil Association has not done this already.

 

If they want to win back consumers they
need to be brave, smart (and please avoid recipe cards). It’s a tough sell as
it’s an emotional one not a rational one. I hate to be a cynic but I fear lots
of meetings later, lots of number crunching, lots of money spent and they won’t
sell any extra.

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