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Business News

Asda to step up price guarantee


The boss of Asda, the UK's second biggest supermarket chain, turned up the heat on major rival Tesco today as he pledged to step up its price guarantee scheme.

Andy Clarke said the grocer, which has more than 540 stores in Britain, has "only just scratched the surface" of the pricing strategy, which allows customers to check receipts and receive a refund if their Asda shop is not 10% cheaper than its rivals.

In a further bid to boost its sales, Asda has launched a regular study of mothers who shop at the chain, so it can further tailor its offering to its key demographic.

In its new study - dubbed the Mumdex - Asda interviewed around 4,000 mothers to gauge their views and experiences in the current economic climate and discovered some 75% had lower disposable incomes than a year ago.

Britain's supermarkets became embroiled in an intense price war since Tesco unveiled its £500 million Big Price Drop last October, with Sainsbury's launching its Brand Match scheme shortly after.

But Tesco recently admitted its pricing strategy had failed after a disappointing Christmas period saw like-for-like sales excluding VAT and petrol drop 2.3% in the six weeks to January 7.

Asda was able to take market share from its number one competitor as it saw like-for-like sales, excluding VAT and petrol, grow 1% in the 14 weeks to January 7, although this was a slight slowdown on the previous quarter, when sales were up 1.3%.

The supermarket, whose customers are 80% women, found that 42% of respondents had been forced to accept a household pay cut or freeze while 23% are borrowing to get by.

The study said: "Mums are having to tighten the purse strings just to stay afloat.

"With lower wages and higher living costs, it is not just the big monthly payments like mortgages that are causing pressure - day-to-day living costs such as food and utility bills are causing problems too."

Meanwhile, Asda said it would invest more than £15 million in rolling out its Butcher's Selection range and £1.6 million in improving its fish counters.

The Asda Price Guarantee saw more than 1 million customers check their receipts per week in December, before coming back down to settle at 500,000 per week.

Last month, Asda unveiled plans to create some 5,000 jobs this year in a £500 million expansion drive.

Its plans include 25 new stores, 43 refurbishments of existing outlets and investing in three new depots.

Last year, the group took on 30,000 staff when it opened about a dozen stores and absorbed 147 Netto sites and their staff following its acquisition of the discount chain.