With Tesco fighting Asda’s 10% cheaper price pledge on a number of fronts, who will be successful? Adam Leyland and James Halliwell report
The battle lines have been drawn.
After two weeks of muffled irritation over Asda's "10% cheaper" Price Guarantee claims, Tesco launched a multi-pronged attack this week, as predicted by The Grocer.
Branding the Price Guarantee website a gimmick, it attacked Asda's "cynical ploy to mislead customers using a flawed comparison that excludes about half Tesco's range" in a series of national press ads on Tuesday and Wednesday.
In one of the ads, it compared the 12 steps needed to save with Asda's Price Guarantee versus the £16.81 saving a shopper could achieve by buying just 12 items from Tesco rather than Asda. In another example, the saving on a large trolley was £58.22 at Tesco.
"You can drive a trolley through it," was the headline for the ad.
Tesco also vowed to report Asda to the Advertising Standards Authority over the claims. UK CEO-elect Richard Brasher called on the ASA "to act, and to act quickly, because in our view customers are being misled by false Asda claims".
And, as The Grocer also predicted, Tesco offered to redeem vouchers if "they're not 10% cheaper".
"Customers shouldn't have to shop again at a store that we believe has misled them. That's why we will be accepting Asda refund vouchers at our tills from Monday," Brasher added.
Morrisons also ran press ads, in both the tabloids and broadsheets, promising a saving of £48.26 on a trolley of goods costing £80.30 versus £128.30 at Asda.
And although Sainsbury's chose not to get involved in an ad-based spat, CEO Justin King said at the company's trading update last week: "The fact is Asda is not 10% cheaper... [which is why] less than one in 600 use it. It is [also] difficult to use and not convenient for shoppers to save in retrospect."
Asda is unperturbed. "If the Asda Price Guarantee were as meaningless as some of our competitors claim," says a PR spokesman, "they wouldn't be spending a shed load of marketing money in an attempt to advertise it for us."
And for the second consecutive week, The Grocer 33 found that for a basket of 33 randomly weighted items, Asda was indeed around 10% cheaper than both Sainsbury's and Tesco, while Asda came in 7.9% cheaper than Morrisons.
Asda claims that eight months of data from the launch of the original APG last April had found that it was coming out 8% cheaper on average.
A senior Asda source told The Grocer that Walmart's gargantuan global buying power and support, plus the imminent addition of the Netto stores, had enabled it to increase the margin to 10%.
But Tesco will claim, in its ASA complaint, that Asda's model is "cleverly" designed to fix the odds in its favour. It's a view supported by Colin Harper, head of insight at the Institute of Promotional Marketing.
"Asda has to be relying on price-discounted offers to get near its target, as its general pricing levels cannot deliver this like-for-like position. Asda is also rewarding people not in cash but vouchers, which could include a hefty element of store payback on redemption. As such this is either a very clever, or a very cynical way to advertise your perceived key benefit."
Experts believe the APG may also rely on customer inertia. "Price promises and guarantees reassure customers but often go unchallenged, particularly if the redemption amount is likely to be low and the process for redemption requires any effort," says Verdict analyst Matt Viner.
Tesco complains that many of Asda's customers won't, or are not able to use a website or print a voucher. "The fact is you will only receive a voucher if they have misled you," says Tesco media director Trevor Datson.
And though Asda chief marketing officer Rick Bendel has insisted that "the Asda Price Guarantee is the first real accountable price promise in retail", the evidence from traffic to the website is that even with a pickup in traffic, redemption rates will be very low indeed. According to Hitwise statistics, the Asda Price Guarantee website received 92, 425 hits in its first week, representing 0.5% of Asda's average weekly 17 million transactions.
Tesco also complains that comparisons are flawed as the service excludes at least 10,000 SKUs "about half Tesco's range". "We aren't talking about Thai lemongrass here," says Datson. "We are talking loose apples."
Asda has promised to ensure that "all of our products are comparable... and is working with [website developers] mysupermarket.co.uk to boost the numbers."
Issues have also been reported with the website not processing requests. Indeed, the fourth-most popular search on Google for the site is 'Asda Price Guarantee doesn't work'.
A note has recently been added advising Asda customers to "please be aware 9am to 12pm is our busiest time on the website, which may result in errors due to system overload. We recommend that you check your shop after 12pm."
There is also confusion within Asda as to whether the vouchers are redeemable for cash. But the vouchers may even be counterproductive, says Verdict's Viner, which is why the "focus is on reinforcing the message that Asda is 10% cheaper".
So, will Asda's price guarantee prevail? Viner believes Asda may have to moderate some of its claims, but "it clearly has its rivals rattled". And the CEO of a leading supplier added that regular price comparisons with an Asda shopping trolley were "nothing like as powerful as a promise to be 10% cheaper". He added: "Tesco's reaction demonstrates that price is the battleground for these two."
As the war of words continues, Tesco is urging the ASA to act swiftly. But based on past performance, this is unlikely. The ASA says it will merge any complaint it receives with the existing Morrisons complaint, which was registered following the launch of the original Asda Price Guarantee website last Spring.
With a case as complex as this, it is offering no predictions as to when it will reach a conclusion. But Asda has defended its position vigorously. The campaign was scrutinised by Clearcast, experts in ad compliance under the BCAP TV Advertising Standards Code, "and it gave us its absolute seal of approval," said an Asda spokesman, "so any suggestion it's misleading is just plain wrong."
In the meantime, Asda was "highly encouraged" by the "fantastic headlines" and the "free coverage" from "the media and our rivals".
The battle lines have been drawn.
After two weeks of muffled irritation over Asda's "10% cheaper" Price Guarantee claims, Tesco launched a multi-pronged attack this week, as predicted by The Grocer.
Branding the Price Guarantee website a gimmick, it attacked Asda's "cynical ploy to mislead customers using a flawed comparison that excludes about half Tesco's range" in a series of national press ads on Tuesday and Wednesday.
In one of the ads, it compared the 12 steps needed to save with Asda's Price Guarantee versus the £16.81 saving a shopper could achieve by buying just 12 items from Tesco rather than Asda. In another example, the saving on a large trolley was £58.22 at Tesco.
"You can drive a trolley through it," was the headline for the ad.
Tesco also vowed to report Asda to the Advertising Standards Authority over the claims. UK CEO-elect Richard Brasher called on the ASA "to act, and to act quickly, because in our view customers are being misled by false Asda claims".
And, as The Grocer also predicted, Tesco offered to redeem vouchers if "they're not 10% cheaper".
"Customers shouldn't have to shop again at a store that we believe has misled them. That's why we will be accepting Asda refund vouchers at our tills from Monday," Brasher added.
Morrisons also ran press ads, in both the tabloids and broadsheets, promising a saving of £48.26 on a trolley of goods costing £80.30 versus £128.30 at Asda.
And although Sainsbury's chose not to get involved in an ad-based spat, CEO Justin King said at the company's trading update last week: "The fact is Asda is not 10% cheaper... [which is why] less than one in 600 use it. It is [also] difficult to use and not convenient for shoppers to save in retrospect."
Asda is unperturbed. "If the Asda Price Guarantee were as meaningless as some of our competitors claim," says a PR spokesman, "they wouldn't be spending a shed load of marketing money in an attempt to advertise it for us."
And for the second consecutive week, The Grocer 33 found that for a basket of 33 randomly weighted items, Asda was indeed around 10% cheaper than both Sainsbury's and Tesco, while Asda came in 7.9% cheaper than Morrisons.
Asda claims that eight months of data from the launch of the original APG last April had found that it was coming out 8% cheaper on average.
A senior Asda source told The Grocer that Walmart's gargantuan global buying power and support, plus the imminent addition of the Netto stores, had enabled it to increase the margin to 10%.
But Tesco will claim, in its ASA complaint, that Asda's model is "cleverly" designed to fix the odds in its favour. It's a view supported by Colin Harper, head of insight at the Institute of Promotional Marketing.
"Asda has to be relying on price-discounted offers to get near its target, as its general pricing levels cannot deliver this like-for-like position. Asda is also rewarding people not in cash but vouchers, which could include a hefty element of store payback on redemption. As such this is either a very clever, or a very cynical way to advertise your perceived key benefit."
Experts believe the APG may also rely on customer inertia. "Price promises and guarantees reassure customers but often go unchallenged, particularly if the redemption amount is likely to be low and the process for redemption requires any effort," says Verdict analyst Matt Viner.
Tesco complains that many of Asda's customers won't, or are not able to use a website or print a voucher. "The fact is you will only receive a voucher if they have misled you," says Tesco media director Trevor Datson.
And though Asda chief marketing officer Rick Bendel has insisted that "the Asda Price Guarantee is the first real accountable price promise in retail", the evidence from traffic to the website is that even with a pickup in traffic, redemption rates will be very low indeed. According to Hitwise statistics, the Asda Price Guarantee website received 92, 425 hits in its first week, representing 0.5% of Asda's average weekly 17 million transactions.
Tesco also complains that comparisons are flawed as the service excludes at least 10,000 SKUs "about half Tesco's range". "We aren't talking about Thai lemongrass here," says Datson. "We are talking loose apples."
Asda has promised to ensure that "all of our products are comparable... and is working with [website developers] mysupermarket.co.uk to boost the numbers."
Issues have also been reported with the website not processing requests. Indeed, the fourth-most popular search on Google for the site is 'Asda Price Guarantee doesn't work'.
A note has recently been added advising Asda customers to "please be aware 9am to 12pm is our busiest time on the website, which may result in errors due to system overload. We recommend that you check your shop after 12pm."
There is also confusion within Asda as to whether the vouchers are redeemable for cash. But the vouchers may even be counterproductive, says Verdict's Viner, which is why the "focus is on reinforcing the message that Asda is 10% cheaper".
So, will Asda's price guarantee prevail? Viner believes Asda may have to moderate some of its claims, but "it clearly has its rivals rattled". And the CEO of a leading supplier added that regular price comparisons with an Asda shopping trolley were "nothing like as powerful as a promise to be 10% cheaper". He added: "Tesco's reaction demonstrates that price is the battleground for these two."
As the war of words continues, Tesco is urging the ASA to act swiftly. But based on past performance, this is unlikely. The ASA says it will merge any complaint it receives with the existing Morrisons complaint, which was registered following the launch of the original Asda Price Guarantee website last Spring.
With a case as complex as this, it is offering no predictions as to when it will reach a conclusion. But Asda has defended its position vigorously. The campaign was scrutinised by Clearcast, experts in ad compliance under the BCAP TV Advertising Standards Code, "and it gave us its absolute seal of approval," said an Asda spokesman, "so any suggestion it's misleading is just plain wrong."
In the meantime, Asda was "highly encouraged" by the "fantastic headlines" and the "free coverage" from "the media and our rivals".
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