Asda targets Boots on prices

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WHEN Asda stores open tomorrow morning they will set off a new round of fierce price cutting among Britain's leading retailers.

Asda, which was bought by the American giant Wal-Mart earlier this year, is targeting the health and beauty market in a direct confrontation with Boots, the high-street chemist.

The Leeds-based retailer believes that Boots the Chemist's 27 per cent share of the British health and beauty sector is vulnerable. "We will plaster our aisles with direct cost comparisons between us and Boots on a range of health and beauty items," an Asda spokesman said.

A spokesman for Boots, who had said earlier last week that the company would not get into a price-cutting war, commented: "There have been price wars before, and we'll take appropriate action if necessary."

Last week, Boots announced moves to slash pounds 160m off its costs. Analysts believe this presents a sizeable war-chest to embark on a price cutting strategy.

The UK supermarket price war intensified last week when Tesco gave notice that it could spend pounds 300m defending itself against Asda's aggressive "rollback" campaign, which has already seen prices slashed on 4,000 goods. Asda expects to make cuts on 10,000 items by the end of next year. It already claims a 5 to10 per cent price advantage over other supermarkets but could increase this to 15 per cent.

Meanwhile Tesco has claimed that it will bring in the "biggest price cuts ever seen in Britain", which could take a heavy toll on struggling retailers like Sainsbury's and Safeway.

But Asda's high-profile "rollback strategy" appears to be hitting home with UK consumers. Research by Taylor Nelson Sofres, the marketing information group, confirmed that Asda's year-on-year sales growth reached 9.5 per cent for the 12 weeks to 22 August compared with 5.4 per cent at Tesco and -0.4 per cent at Sainsbury's.