Store Wars round 2 – Asda parent demands govt inquiry into Tesco |
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Mon, 29 Aug 2005 13:05
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LONDON: Asda ownera U.S. based Wal-Mart have asked the government to investigate rival chain Tesco. Simultaneously, Asda also announced huge price cuts and promotions in a bid to regain its claim of being the ''cheapest supermarket''. The retailer was rapped last week by the nation’s advertising watchdog for their misleading ads that said Asda was ''officially Britain's lowest-priced supermarket''.
Wal-Mart chief Lee Scott said the government must investigate Tesco’s dominance in the food market where its share stood at a record 30.5 percent. Asda which is UK’s second largest supermarket chain had a 16.7 percent share.
Scott pointed out that the UK’s planning laws made it difficult to compete and therefore it was necessary for the government to intervene now because Tesco was enjoying over 30 percent share of the market.
It’s not difficult to understand Scott’s resentment. Tesco’s dominance of the food market has hurt Asda’s sales. During the 12 weeks period to August 12, Asda had slipped to 16.7 percent down from its previous year’s 26.6 percent of the grocery market share. In the meanwhile, Tesco continues to march ahead: according to one survey, Tesco’s sales rose 11 percent compared with same quarter last year whereas Asda’s sales increased by only 3 percent.
Also, last week the Advertising Standards Authority, urged by Tesco, had asked Asda to immediately stop its advertising campaign that claimed it to be the UK’s cheapest store based on a poll by the magazine ‘The Grocer’. The Grocer’s survey found Asda to be the cheapest store for the seventh consecutive year. The regulator said the ads were misleading as the Grocer’s survey omitted many items and its list of 33 product lines was not representative of the average shopper’s list.
This week, Asda is expected to launch a new round of discounts and schemes such as ‘buy-one-get-one-free’ which total up to over £130m. The store explained that the price cuts and promotions as part of its 40th Anniversary celebrations and will last for three months.
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