Aldi and Lidl under siege? Inside Asda’s audacious price match scheme

Many currently working in Asda’s marketing team are likely a little too young to remember when the retailer used to give customers money back if their weekly shop was more expensive than its main rivals.

Asda was so serious about being the cheapest that the deal applied if it wasn’t at least 10% cheaper.

That scheme, billed as a game-changer by former boss Andy Clarke in 2010, was retired eight years later. It was by then seen as obsolete in the age of everyday low prices (EDLP), just like those offered by the very retailers it didn’t actually cover – Aldi and Lidl.

Last week, its owners the Issa brothers made their latest play in an attempt to regain Asda’s position as the UK’s second-biggest supermarket, after years of losing out to the German discounters and its more finely tuned traditional supermarket rivals.

Aldi, and for the first time, or so at least it claims, Lidl, are the subject of Asda’s marketing and price strategy. It has become the latest supermarket to use price matching in a bid to shore up loyalty, alongside other moves to persuade consumers it is back in the game when it comes to quality, availability and price.

The scheme has, predictably enough, already been mocked by those in the firing line.

Lidl points out that another supermarket, Morrisons, tried and failed to match its prices in 2014 with a scheme under Dalton Philips called Match & More. His replacement, David Potts, wasted little time in scrapping it, again mostly because it was seen as too complicated and ignored the fact that customers simply wanted good old-fashioned EDLP.

Price match schemes, as Asda’s current team will soon find out to their cost, inherently bring more complexity and add costs to retailers – just, some would argue, at the very time that they are screaming out for the opposite.

Lidl also points out that Asda’s scheme is far from a true like-for-like comparison.

How will Asda’s price match work? 

Asda’s T&Cs highlight it will not be attempting to price match in its Express stores, while it will match only on 287 products – that’s around 10% of Lidl’s range and less than 1% of Asda’s.

Lidl also points out the T&Cs do not guarantee a quality match, only stipulating that they “take into account any reasonable size or weight difference through applying a pro-rata unit price based on Asda’s product”.

“Giving all households access to great food at the lowest prices is a commitment we have kept for almost 30 years now,” says a Lidl spokeswoman.

“This commitment not only applies to our full range of products, but to every single Lidl store across the country too.”

Aldi, meanwhile, also holds up the “tiny proportion” of Asda’s range that is actually included in the price match and says the very fact that Asda was having to drop those prices by an average of 17% to match its prices tells its own story.

“Customers aren’t fooled by gimmicks and know the only place you get Aldi prices is at Aldi, which is why millions of shoppers have switched from the traditional full-price supermarkets to us,” says a spokesman.

Yet there is no doubting the greater polish and pizazz that Asda has brought to its price matching rollout, which is in keeping with much of what the Issas have done over the past couple of years.

Impressive point of sale support has meant customers can hardly miss the new pledge when they walk into stores, just at a time when they are counting every penny of their shopping as never before.

The price match also adds to a growing sense of momentum and comes just two months after its M&S quality promise marketing, which sought to tackle the adverse quality perceptions that had been allowed to creep in amid its demise in the latter years of the Walmart era.

Fighting for second-best supermarket

It too was mocked by its rivals, but so too, once, were the discounters.

Just as Clarke’s ill-fated Price Guarantee proved not to be the game-changer he promised, neither will Asda’s latest pledge to shift the dial, on its own at least.

But as part of a wider set of well-executed plays, it is increasing the chances of the new owners making good in their ambition to be number two.

The trouble, of course, is that when fighting for second best, you are always likely to be outshone.

Asda’s acceleration of sales by 3.4% in the four weeks to Christmas, according to the latest Kantar figures, looks impressive enough.

But it doesn’t look so good compared with the 12% and 8% achieved by Aldi and Lidl respectively.

Or indeed the 9% recorded by current number two Sainsbury’s, which is much further along its equivalent journey in reassessing its price and quality credentials in the wake of its own difficulties.

Yet it’s clear by the Issas’ latest investment in prices that they realise more needs to be done at strategic level – and they are prepared to invest in doing so.

The biggest guarantee of all is that this will not be the last major move in that front, as the Christmas trading results kick off what promises to be a fascinating and brutal power battle.