Asda is reportedly putting pressure on some key suppliers in a bid to lower prices and win back customers. The supermarket giant has been experiencing a fall in sales and has promised its biggest price cuts for 25 years under returning boss Allan Leighton, in a bid to revive the struggling chain.
Asda’s like-for-like sales were 3.1% lower for the four months to Easter compared to the same period last year. However, this improved in May with Mr Leighton claiming there were “green shoots” in turnaround efforts. Now, it is claimed the chain is calling on key suppliers — including household names like Heinz and Nestlé — to “share the load” in its price war.
It is hoped the move will recover flagging sales, The Telegraph reports, adding Asda is locked in discussions with some of its biggest partners who are resisting pressure for major cuts.
It is thought meetings are expected to be held in the coming weeks in a push to strike an agreement.
An Asda source told The Telegraph: “A lot of suppliers have been supportive. Others are more reluctant. It is about sharing the load. Some just haven’t broken out of the four-week [temporary discount] promotion cycle.”
The boss of one Asda supplier also told the newspaper: “What we have spotted is that the buyers are not talking to anyone unless it is about money. We are just keeping our heads down because we fear that when the phone rings, that is what it’s going to be about. The general background feeling is that it’s desperate times, desperate measures, because they’re a business in trouble.”
Asda is the UK’s third largest supermarket chain behind Sainsbury’s and Tesco.
The retailer has struggled to keep up with its larger rivals and has come under pressure from fast-growing discounters Aldi and Lidl since its debt-fuelled takeover in 2021. Mr Leighton said in May that Asda’s “prices were too high and availability was woeful” before his appointment, leading shoppers to switch.
He said it is the chain’s ambition to make “Asda the number one choice again for value-conscious families”.
The grocer’s executive chairman previously said he wanted Asda to be five to 10% cheaper than its competitors.
In June, the chain announced it was investing £10 million in modernising 180 of its cafes and expanding menus at a time when rival supermarkets have been cutting back their in-store cafes and counters.
An Asda spokesman told The Telegraph: “The material investment we are making this year to lower prices has already made a difference by opening up a 3pc-6pc price gap over other traditional full-service supermarkets.”
Industry figures released in May showed Asda’s share of the grocery market had shrunk to 12.1% – its lowest since Kantar started collecting data in 2011. Latest figures show Asda’s share at 11.9%.