Asda and Sainsbury's Launch £450 Million Price War
LEEDS, WEST YORKSHIRE - With a possible price war at hand, Asda and Sainsbury's have their sights set on capturing a bigger piece of the UK retail pie.
Just before last week's trading update by Tesco, Asda and Sainsbury's announced a series of price cuts that together amount to £450 million. The bulk of the price cuts will come from Asda, the country's second largest retailer, according to the Telegraph. The retailer plans to slash prices by £300 million in Q1 2015. For its part, Sainbury's is planning to cut prices on 1,000 products by a total £150 million over the next three years.
“We are investing £150m per year for the next three years in some of our customers’ most popular purchases, with a total of 1,000 prices cut since we announced this investment in November,” shared Mike Coupe, Chief Executive of Sainsbury’s. “This will come as welcome news to customers who might be feeling the pinch after Christmas.”
This latest round of price cuts is actually a part of a previously announced campaign by the two retailers. Asda started this price war as far back as late 2013 with the declaration of its commitment to slash prices by £1 billion over the ensuing five years, a program which Q1's £300 in cuts is a part.
What makes this latest news significant, however, is that it represents Asda's single largest price investment strategy in the company's history, according to a press release.
“We invest in price year round but we're kicking off January with our Biggest Ever Rollback - spending £300 million to bring more value across our stores and online on the products customers buy week in, week out,” shared Barry Williams, Chief Merchandising Officer for Food at Asda. “We're going further than ever before, rolling back those every day, can't live without items at a bigger percentage than we've ever been able to do previously.”
Analysts such as Shore Capital's Clive Black believe that the pace of these price cuts are a reaction to the difficult market British retailers operated in during 2014.
“The British grocery market had a tumultuous 2014, amongst the worst in living memory for investors and management alike,” he told the Telegraph.
It may be the hope of Asda and Sainbury's that this latest round of cuts will reverse this trend and paint a brighter picture for 2015. Stay tuned as we continue to follow this story.
