Asda’s seven-year reign as the UK’s cheapest supermarket is being challenged by arch rival Tesco, according to new research by The Grocer.
The trends highlighted in the results of the six-month review of The Grocer 33 and in our new pricing survey The Grocer 100 (pp28-29) show that the two retailers are involved in a titanic struggle to become the cheapest supermarket chain.
The Grocer 100 checks the price of 100 commonly bought grocery items stocked by all the major supermarket chains. Since July, retail and trade research specialists ESA have been checking the prices of these products on a weekly basis.
Asda has provided the cheapest average basket for the period between July 6 and December 14 at £167, which was 1.6% cheaper than the average cost of The Grocer 100 shopping list at Tesco, which was £169.74.
However, as the graph above shows, Tesco has been closing the gap on Asda since July. And this week Tesco’s £167.84 basket was cheaper than Asda for the first time - albeit by just 0.4%.
Our six-monthly review of The Grocer 33 also shows Tesco drawing closer to its main rival on price.
We relaunched The Grocer 33 this summer with a regularly changing basket of goods to build up a broader picture of pricing across the multiple grocery sector.
Asda has had the cheapest average basket for each of the four different baskets we have shopped since July.
Retail analyst at Cheuvreux, Mike Dennis, said that Tesco’s focus on pricing could put Asda in a difficult position.
He said: “Tesco’s current market position means that it can invest 100% of incremental growth into pricing. This does not necessarily mean looking towards Asda for benchmarking but it can afford to look at the discounters in order to set pricing levels.”
Without the same levels of sales growth as Tesco, he said, Asda would not be able to continue investing in price without compromising margins.
The pressure on Asda is likely to increase in January when Tesco is expected to launch its traditional New Year campaign of price cuts.
While Asda and Tesco battle it out for the number one spot, there is new evidence that Justin King’s policy of taking down prices is improving Sainsbury’s competitive position.
Results from The Grocer 100 survey show that prices at Sainsbury have fallen by 4% since July. Despite these cuts, however, the retailer is still 4.1% more expensive than Tesco and and 4% dearer than Asda.
Our research also shows Morrisons’ prices consistently below the industry average. It is also harmonising Safeway prices, which were on average 0.9% dearer than Morrisons’ in the past six months.
Our review of The Grocer 33 survey also shows Morrisons is leading the way on customer service and availability.
>>p28 The Grocer 33 review
Ronan Hegarty
The trends highlighted in the results of the six-month review of The Grocer 33 and in our new pricing survey The Grocer 100 (pp28-29) show that the two retailers are involved in a titanic struggle to become the cheapest supermarket chain.
The Grocer 100 checks the price of 100 commonly bought grocery items stocked by all the major supermarket chains. Since July, retail and trade research specialists ESA have been checking the prices of these products on a weekly basis.
Asda has provided the cheapest average basket for the period between July 6 and December 14 at £167, which was 1.6% cheaper than the average cost of The Grocer 100 shopping list at Tesco, which was £169.74.
However, as the graph above shows, Tesco has been closing the gap on Asda since July. And this week Tesco’s £167.84 basket was cheaper than Asda for the first time - albeit by just 0.4%.
Our six-monthly review of The Grocer 33 also shows Tesco drawing closer to its main rival on price.
We relaunched The Grocer 33 this summer with a regularly changing basket of goods to build up a broader picture of pricing across the multiple grocery sector.
Asda has had the cheapest average basket for each of the four different baskets we have shopped since July.
Retail analyst at Cheuvreux, Mike Dennis, said that Tesco’s focus on pricing could put Asda in a difficult position.
He said: “Tesco’s current market position means that it can invest 100% of incremental growth into pricing. This does not necessarily mean looking towards Asda for benchmarking but it can afford to look at the discounters in order to set pricing levels.”
Without the same levels of sales growth as Tesco, he said, Asda would not be able to continue investing in price without compromising margins.
The pressure on Asda is likely to increase in January when Tesco is expected to launch its traditional New Year campaign of price cuts.
While Asda and Tesco battle it out for the number one spot, there is new evidence that Justin King’s policy of taking down prices is improving Sainsbury’s competitive position.
Results from The Grocer 100 survey show that prices at Sainsbury have fallen by 4% since July. Despite these cuts, however, the retailer is still 4.1% more expensive than Tesco and and 4% dearer than Asda.
Our research also shows Morrisons’ prices consistently below the industry average. It is also harmonising Safeway prices, which were on average 0.9% dearer than Morrisons’ in the past six months.
Our review of The Grocer 33 survey also shows Morrisons is leading the way on customer service and availability.
>>p28 The Grocer 33 review
Ronan Hegarty
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