Asda backs 'essentials' price cuts

Asda cutting prices to help close the gap with the discounters

Updated: 
Asda backs 'essentials' price cuts

Supermarket chain Asda is to spend £300 million on price cuts in the first three months of this year as part of a £1 billion investment to help close the gap with the discounters.

The Leeds-based retailer will cut the prices of 2,500 "essentials" such as fruit and vegetables, cereal, nappies, toilet rolls, milk, meat, eggs and fish.

The move is part of a five-year £1 billion strategy announced in November 2013 which Asda says will help push it further below rivals Tesco, Sainsbury's and Morrisons on price while closing the gap with discounters such as Aldi and Lidl.

The four big supermarkets have been battling over a dwindling middle market which continues to be gnawed away from high-end Waitrose sales and rapidly expanding budget grocers.

Asda's chief merchandising officer for food, Barry Williams, said: "After a great Christmas with the family, January is the month we all start looking at the size of our waists and our wallets.

"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.

"With hundreds of products at 50p, and even more at 15% less than normal, we're aiming to make a big difference for families in their weekly shop."

The supermarket said, in addition to price-cutting, it would be ploughing £250 million into "product quality, style and design".

It said its investments would be funded by an operational savings programme as well as increasing the way it takes advantage of the purchasing power held by the giant WalMart group.

Asda reported its worst quarterly sales performance in nearly a decade in November.

Like-for-like sales fell by 1.6% in the third quarter to the end of September with the retailer warning that the turbulence stirred up by the supermarket price war would weigh on its performance for the next 12 months.

Sainsbury's promptly announced that customers would see more than 700 new regular prices in stores this week as part of its £150 million investment per year for the next three years.

It said the investment would translate into cuts to regular prices on more than 1,000 of the most popular items in customers' baskets and followed 200 lower prices put in place in November.

Sainsbury's chief executive Mike Coupe said: "We are investing £150 million 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.

"This will come as welcome news to customers who might be feeling the pinch after Christmas.

"These lower everyday prices are a part of our ongoing commitment to offering our customers great-quality products at great prices."

10 tricks supermarkets use to get you to spend more

10 tricks supermarkets use to get you to spend more


Read more on AOL Money

Asda petrol price at four-year low

Asda promises more price cuts, as cost of UK groceries falls

PM: New Asda Jobs 'Good News for Britain'