Will Asda’s discounter price matching scheme pay off?

Following Tesco’s launch of Aldi Price Match in 2020 and Sainsbury’s version a year later, Asda has made what many see as an overdue move, with the added twist that its scheme extends to matching Aldi and/or Lidl – whichever is cheaper.

So, how does it work? And, as Asda sees its share continue to shrink, how important will the new price match prove?

Announced last week, the scheme sees Asda match the two discounters on 287 comparable grocery products, which have been reduced in price by an average of 17% to match whichever discounter has the lowest price on these products (though five prices have actually gone up as a result).

Its latest play comes with heavyweight in-store support and TV advertising. But the scheme has been mocked by those in the firing line.

Lidl points out Morrisons tried and failed to match its prices in 2014 with a scheme under Dalton Philips called Match & More, which his successor David Potts scrapped. It also argues Asda’s scheme is far from a true like-for-like comparison.

The 287 products in the push account for only about 10% of Lidl’s range – and less than 1% of Asda’s. And Asda’s T&Cs also highlight it will not be price matching in its Express stores (though it will online).

An Aldi spokesman scoffed: “Customers aren’t fooled by gimmicks and know the only place you get Aldi prices is at Aldi.”

Growing momentum

But the price match adds to a growing sense of momentum, with a Fab Five fruit & veg offer also announced this week, and two months after Asda’s M&S ‘taste match’ ads sought to tackle adverse quality perceptions that had crept in during its latter years under Walmart.

Shore Capital analyst Clive Black says that in isolation the potential impact of Asda’s price match is “questionable”, but that as part of a package it could be “really important”.

“Tesco’s Aldi Price Match played an important part in a signal of intent that it wasn’t going to lay down and think of England while the discounters ran riot,” he says.

“But what’s important is what follows. Other areas such as availability, in-store execution and for Tesco of course its successful investment in Clubcard Prices were all part of its success, and it has meant Tesco has been able to maintain and grow share without opening new stores.

“Asda now at last seems to be coming to the boil in terms of taking Aldi and Lidl on.”

And not before time, Black adds. “Andy Clarke wanted to do this back in 2014 but Walmart said no and took its dividend instead. It didn’t allow Asda to take the discounters on and look what happened.”

IGD global insights leader Bryan Roberts agrees as part of a wider suite of measures on price and investment in own-label pricing, Asda’s price match is a significant move.

“We’ve seen with Tesco and Sainsbury’s that it’s been a reassuring arm around the shoulders of their customers that you don’t have to go elsewhere,” Roberts says. That Tesco and Sainsbury’s haven’t “slumped as badly” in the cost of living crisis as they did in 2008 is “testament” to how much sharper they have become at battling the discounters, he adds.

Under the Issas, Asda is now sharpening up too.