On Tuesday 6 January, Asda, the UK’s second biggest food retailer, said it would commit £300m to lowering prices in the first quarter of 2015.
The price cuts, the retailer claims to be its ‘Biggest Ever Rollback’, are part of investment plans already announced. Asda unveiled a £1bn five-year price drive in late 2013 and the £300m is part of this initiative.
Asda has committed to reduce the price of big brands as well as 2,500 essentials including cereal, milk, eggs and meat.
Brand View has reviewed the Bakery, Cereals, Dairy, Eggs, Fish, Fruit, Meat, Nappies, Toilet rolls and Vegetables categories in Asda and has seen that since 1 December 2014 the average promoted price has dropped by 1.1 percent.
Asda’s average promoted price steadily rose by 0.9 percent between 1 December and 12 December, it then stabilised up to Christmas Day, before dropping 0.9 percent over the next nine days.
The biggest price reduction occurred on Sunday 4 January when the average promoted price dropped by 1.1 percent. Reductions were applied throughout the categories, with the greatest number targeting Dairy.
Looking at the number of promotions that Asda ran since Christmas, we see a spike on 4 January which matches the timing of the drop in average promoted price. However, there is also an 8.3 percent increase in the number of promotions on 6 January – the day the retailer announced the rollback promotions..
The average depth of cut dropped 0.5 percent on 12 December which contributed to the increase in average promoted price. Following 12 December the depth of cut trend closely mirrors that of the number of promotions, peaking on 6 January at 23.6 percent.
The most publicised price cut from Asda was it’s move to charge 89p for four pints of milk, aligning its pricing with Aldi and Iceland – highlighted in a previous Brand View Insight Is Iceland the cheapest retailer for milk?
Iceland reduced the price of four pints of milk on 22 October 2014 and Aldi lowered costs on 26 November 2014. Lidl continue to charge 95p and Sainsbury’s, Tesco and Waitrose all remain at £1.00. Co-op and Morrisons charge £1.39 for a single four pint carton but both have multi-buy deals that bring the promoted price down to £1.00, therefore comparatively equivalent to their competitors.
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