Asda is fighting back against Aldi’s meteoric growth by lowering the price of goods that its weekly shoppers flock to buy from the booming German discounter.
Asda chief executive Andy Clarke said: “Aldi and Lidl have laid down a lot of space. Over the last 12 months our price gap to Aldi has halved as we have invested in essentials. That’s extended the price gap to the rest of the market in turn.”
In an exclusive interview with Retail Week at Asda parent Walmart’s annual shareholders’ meeting in Arkansas, US, Clarke said: “We made a £100m investment in price and continue to invest in price. It is becoming more and more visible to customers that our price gap is increasing.”
Asda declined to say which products it had slashed the prices of and by how much, but it is understood meat and fresh produce are among the categories targeted.
Asda chief marketing officer Stephen Smith said: “Looking at its limited range of products we can see where our customers are going to Aldi and have invested in price in those areas. There are a lot of customers who have a secondary trip there but now they won’t have to.”
Aldi has extended its appeal in the last year as it opened new stores and attracted thrifty shoppers. Its quirky ‘Aldi. Like brands. Only cheaper’ marketing campaign has also caught shoppers’ imaginations.
Kantar Worldpanel data showed Aldi recorded sales growth of 31.5% in the 12 weeks to May 12. It now holds a record market share of 3.5%, compared with 2.8% last year.
Rival Lidl has also enjoyed strong growth, according to Kantar.
However, Smith said that Asda would not throw marketing spend behind its price initiative because Aldi remains a small player.
Clarke said Asda’s dedication to cutting prices through its Price Lock promotion was paying off. “We need to continue to sell our value whoever the customer is. Our price gap is getting wider,” he said.
Morrisons maintained its basket price is “extremely competitive” in the face of competition from the discounters.
Sainsbury’s boss Justin King said its Basics range allowed shoppers to “spend less money than you would in a discounter”.