Asda has come out all guns blazing in a new supermarket price war to mark the start of 2025. But does it have the ammunition needed, or is it firing blanks?
With price cuts across no less than 2,500 household staples, offering a chunky average reduction of 26% at that, it seems like a decent first stab at trying to recapture the price DNA it was once famous for.
But the cuts ironically also illustrate just how much ground Asda has lost, and how far it must travel to catch up… and not just in January either.
Asda’s annus horribilis
It’s a year this week since Asda became the first supermarket to price match against both Aldi and Lidl, in a move it claimed at the time would add “further firepower” to its already established position as the lowest-priced full-range supermarket in the UK.
You don’t have to be a supermarket nerd to know things haven’t exactly worked out as planned since then.
Fast forward 12 months, and we have seen a raft of changes across the Asda flight deck – the departure of both Issa brothers, a pretty disastrous cameo from Lord Stuart Rose, and the parachuting in of another legendary retailer, Allan Leighton, in its latest bid to turn things around.
During this time Asda’s market share has gone into free fall, while – thanks to the continued dominance of its Clubcard loyalty programme – Tesco has parked its tanks on Asda’s lawn, last year even stealing Asda’s Grocer 33 crown for price, for the first time since it was launched in 1997.
The renowned competition, in fact, began the last time a certain Leighton was at the helm at Asda House.
The big question now is whether Leighton and Asda can find new ways of recapturing the old magic, against a financial and ownership backdrop which will arguably make his task even harder than it was first time around.
Facing the competition
In case they needed reminding of the scale of the task ahead, already this week we have seen Lidl announce more than £1bn of sales in the run-up to Christmas, with sales up 7% year on year. These are figures Asda, of late, can only dream of.
Morrisons, which this time a year ago was widely seen as a fellow laggard but has fared much better in 2024 under Rami Baitiéh’s leadership, this week showed it was intent on keeping up the pressure by announcing a big expansion of its own discounter price-matching scheme.
Tesco, whose relentless Clubcard has been the single weapon Asda has lacked the most, looks likely to complete the tough outlook ahead for all its traditional rivals when it announces its festive performance next week. It would frankly be a surprise for it to reveal anything but another powerful show of force.
Put into that context and Asda’s ‘Big Jan Price Drop’ appears anything but.
However, the good news for Asda’s staff and investors, who have both had their fair share of misery over the past 12 months, is that nobody knows more than the man back in charge that far more is needed in a renewal which must be sown from the ground up.
Leighton has already said it will take three to five years to get Asda back firing on all cylinders, identifying the need to restore the neglected standards of its stores along with its also neglected leadership position on price. Other priorities include, of course, finally finding the elusive younger CEO so desperately needed to take on the day-to-day running.
Will Asda’s ownership situation and the money men backing it give Leighton the tools to find the financial firepower and leadership talent he needs, or is Asda facing more trouble ahead? We will find out as 2025 unfolds.
No comments yet