Supermarket shares slipped yesterday after Asda fired the latest salvo in a price war by announcing cuts on nearly 1,000 products.
Britain’s third-largest grocer has stepped up its fight to win customers ahead of what threatens to be an expensive Christmas for families.
Retail experts said there may be further price cuts in the sector before the festive season as Asda’s ‘go big or go home’ move spooked stocks.
Tesco shares fell 0.2 per cent and Sainsbury’s dipped 0.6 per cent. Asda said prices have been cut by an average of 6 per cent across 956 household staples.
Executive chairman Allan Leighton has been trying to turn around the beleaguered firm, which has seen its market share crash from 12.7 per cent to 11.8 per cent in the past year.
Leighton, who returned to Asda last year having been chief executive from 1996 to 2000, has already launched a round of price cuts this year. The grocer aims to be 7 per cent to 10 per cent cheaper than rivals within the next year.
Price cuts: Asda’s executive chairman Allan Leighton (pictured) has been trying to turnaround the firm, which has seen its market share crash from 12.7% to 11.8% in the past year
The latest round of cuts include lowering Asda Gravy Granules from £1 to 69p and Asda Chicken Tikka Masala (392g) from £2.40 to £1.57.
Once Britain’s second-biggest supermarket, it has been flailing since brothers Mohsin and Zuber Issa and private equity giant TDR Capital bought it in a £6.8billion debt-fuelled deal in 2020.
Asda chief customer officer Rachel Eyre said yesterday: ‘We understand the pressure families are under from rising living costs and we’re stepping up our support as we enter an expensive time of year for our customers.’
Retail analyst Jonathan De Mello said Asda was ‘clearly not pulling any punches with this latest initiative’ with prices on some goods cut by as much as 30 per cent.
He added: ‘Asda under Allan Leighton appears to be adopting a “go hard or go home” mentality, and that frankly is what the business needs to stand any chance of winning shoppers back.
‘Predictably, Tesco and Sainsbury’s have taken a share price hit as a result of Asda’s announcement, given the potential for a protracted price war in the run up to the key Christmas period.’
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