Asda dubs rivals’ money-off vouchers ‘an admission of guilt’

Asda deliberately opted out of using money off vouchers during 2013 to invest in long-term low prices.

Williams said: “It’s an admission of guilt. It’s an admission that they have overcharged you compared to what you would have paid at Asda. It’s saying ‘if you want to let us overcharge you again come back next week’.”

“During 2013 we removed all short-term vouchering from our business. Our base level of business has no artificially stimulated level of demand.”

Williams said Kantar Worldpanel data suggested that over Christmas 4% of the big four retailers’ turnover was “given away for free” through vouchers.

Asda is instead focusing its efforts on its ‘Price Lock’ campaign to drive volume growth. The grocer last year increased the number of cucumbers it sold from 30 million to 50 million after lowering its price, for example.

Asda today revealed fourth quarter like-for-likes edged down 0.1% while total sales rose 1.3%. Full-year like-for-likes rose 0.5% and total sales were up 1.9%. Asda said profits rose during 2013 due to tight cost control but declined to give a figure.

Asda chief executive Andy Clarke stressed a tough economy outside of London and the South East continues to put pressure on his customers’ spending.

The average UK household had £160 a week of discretionary income in January 2014, up £3 a week year-on-year, according to the Asda Income Tracker which was released today.

Clarke said Asda had a “good” December and had seen a “positive” move from discount shoppers to Asda.

Clarke said the number of meetings with MPs scheduled for 2014 has increased since last year and that retailers increasingly have greater political influence.

In November Clarke unveiled his five-year strategy to Redefine Value Retailing after discounters Aldi and Lidl muscled in on its market. The strategy centres on investing in price and quality, improving the store experience, bolstering its online proposition and, towards the end of the five years, moving into convenience stores.

Clarke said: “The market has changed. It’s not just about the discounters, we have got online grocery growth too. The key is to change before you need to change.”

Asda chief financial officer Alex Russo said Asda has the “widest price gap to Tesco we have ever had and the closest to Aldi and Lidl.”

Clarke said an internal team has been set up create three test stores which will open this year. He intends the stores to go some way to answering the conundrum facing big box retailers as to how to fill space lost to sales which have moved online.