ASDA – more promotion issues than most, and what this means to brands

Asda Agrees To Make Changes After Being Singled Out By CMA In Probe Into Supermarket Pricing Practices

Asda has agreed to change the way it operates promotions after the Competition and Markets Authority (CMA) singled it out during its investigation into pricing tactics used by the leading supermarkets. .

Consumer watchdog Which? raised concerns about supermarket pricing and promotional practices via a super-complaint last year. The CMA’s investigation found that supermarkets generally had “good awareness” of consumer law and took compliance seriously. However, it committed to follow-up work that involved engaging with the supermarkets to ensure that ‘was/now’ offers and multi-buy deals were genuine and did not mislead shoppers.

In a statement today, the CMA said it had met with a number of supermarkets and asked them to work with their Trading Standards Services partners to review their pricing and promotional practices. All of these supermarkets were said to have engaged “constructively” with the CMA and it now expects them to review their practices and make any necessary changes to ensure consumers can be confident they are “getting a good deal”.

The CMA added that it has had particular engagement with Asda in relation to specific areas of concern. While the CMA has not made any findings against Asda, the chain has given a written commitment to the competition regulator to change the way it operates ‘was/now’ and multi-buy deals. The CMA said it welcomed Asda’s commitment to change its promotional practices and strengthen its compliance controls, adding the revised business rules it is implementing will ensure that:
•‘Now’ prices will not be advertised for longer than the ‘was’ price applied, ensuring they are a meaningful comparison
•Multi-buy offers will represent better value than a single product before the offer
•Multi-buy offers will not be immediately followed by ‘was/now’ promotions, so it will be easier for shoppers to tell what is a good offer
Asda has already started making changes and these will be fully implemented by August 2016 with CMA saying it will check how they are working 6 months later.
ASDA store
Michael Grenfell, CMA Executive Director, Enforcement, said: “The CMA’s examination of the market, following the super-complaint, found that supermarkets generally take compliance seriously, but there were some promotional practices that could mislead shoppers.

“We welcome the commitment we have received from Asda as well as the engagement from other supermarkets, and expect them all to ensure that their practices are not misleading and that shoppers are better informed and able to choose the products that most suit their needs.”

The CMA added that its follow-up work to the super-complaint has now come an end. Which? executive director Richard Lloyd commented: “Following our super-complaint last year, we are pleased to see the CMA investigation has resulted in Asda taking action to stop misleading special offers. Asda has been found breaking the rules and now must immediately clean up their act.

“Our super-complaint and actions taken by the authorities should serve as a clear warning to all retailers. If they try to pull the wool over consumers’ eyes they will not get away with it. Retailers must get their house in order.”

RVS comment that;

ASDA have been pushing the boundaries for some time, by simply alternating BOGOF and ‘Price Offers’ (two for the price of one establishes the price of one :). They have, of course cleaned up their offer, but we confidently predict that, as their objective is to be ‘only slightly more expensive than ALDI’ and their ability to manage promotion volume is lamentable, overall volumes will continue to decline.

An objective of being slightly worse than a competitor on a key measure without any kind of definition of what your customers need is either foolish, or simply desperate.

Simply understanding that you will need to flex to meet local demand patterns as a replacement for the failed ‘one size fits all’ would be enough to help them through. This will, predictably, need changes at the top, and the kind of new thinking that Tesco have employed.