Asda boss takes swipe at Tesco discounting

Chief executive criticises price-cut promotions of rivals
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The boss of Asda yesterday attacked the massive pre-Christmas discounts offered by his rivals, in a thinly-veiled swipe at retailers such as Marks and Spencer, Debenhams and Tesco.

Andy Bond, the supermarket chain's chief executive, said: "There are lots of struggling retailers who are confusing customers with 20 per cent off this day, 50 per cent off that day. That will stimulate sales in the short term, but that will not be the way to grow a business in the economic downturn."

However, Mr Bond declined to name any specific retailers.

His comments came as Tesco said it would cut the prices of 1,000 products, including Christmas food, drink, toys and gifts, by 50 per cent this weekend. Earlier this week, Debenhams launched its third three-day festive sale, with 20 per cent off many items. M&S introduced further pre-Christmas discounts yesterday, after holding two one-day sales held in recent weeks.

Mr Bond criticised such hefty promotions as "gimmicky" and claimed that they sowed the seeds of "mistrust" among shoppers. Big sales days were "a horrendous way to run a retailer", he suggested. However, Asda has also held some significant one-off price promotions this year, particularly during the summer when it cut prices on selected items for a few weekends. Mr Bond said Asda, owned by the US supermarket group Wal-Mart, had no intention of launching a range of discounted brands, such as those introduced by Tesco in September. "It offers confusion rather than clarity," he said. "Adding a fourth tier to your brand hierarchy – I just don't get it."

Asda revealed that the sharp slowdown in consumer spending had led to radical changes in shopping patterns. For instance, customers are buying smaller portions of food, such as Christmas pudding, and pack sizes, as well as scrutinising sell-by-dates and purchasing more frozen food as they seek to reduce wastage. Mr Bond also said his customers were increasingly cooking from scratch and switching to Asda's cheaper own-brand products.

Asda said sales of hair dyes were up 27 per cent as customers cut back on trips to hairdressers. Sales of curry ingredients had jumped by 40 per cent in the past year, balsamic vinegar had risen by 70 per cent, olives were up by 50 per cent and champagne rocketed by 100 per cent as shoppers shunned restaurants to cook and entertain at home. The doubling in sales of champagne at Asda also suggested that consumers were seeking value for money and the grocer was attracting more middle-class shoppers, Mr Bond said.

However, sales of some ready meals had fallen by 40 per cent as customers attempted to save money by cooking their own meals.

Mr Bond said he believed the current downturn would lead to a new generation of British consumer, who was more focused on cutting waste, seeking out low prices and spending more time entertaining at home, such as with Nintendo Wii consoles.

He added: "We are moving into an era of the frivolous being unacceptable and the frugal being cool. It won't be everybody, but there will be a type of consumer that will be defined at this moment that will stay with us for a long time."