ASDA: New Round of Price Cuts

UK -- ASDA has stepped up its price cutting campaign as the UK supermarket sector experiences even more competition, according to a report in The Retail Bulletin.

Wal-Mart owned ASDA said it is cutting prices by a total of £65m on a range of food and non-food lines.

As the Easter weekend looms, a key period for DIY and garden sales, ASDA is cutting the price of a garden spade from £9.96 to £8.96, while a cast iron barbecue falls from £12.97 to £10.97.

The retailer also expects to have sold around 18 million Easter eggs, with one-third of the UK population receiving an egg bought from an ASDA store.

The latest cuts mean that ASDA will have reduced prices by £175m by the end of June, which it said is the biggest ever reduction across the first half of the year.

Market leader Tesco has also implemented deep price cuts across a wide range of products this year. Both face increased competition from Morrisons, which acquired Safeway last month to become the UK's fourth biggest supermarket operator.

Like Tesco and ASDA, Morrisons competes strongly on price, and early this week said price cuts implemented at larger Safeway store, bringing them into line with Morrisons own stores, had cut more than £600 a year of a baked goods out of 23 core grocery lines.

The market is now waiting to see how Justin King, new ceo of number three operator Sainsbury's, plans to respond. Some observers are predicting the former ASDA and Marks & Spencers executive will follow his rivals and cut prices, while other suggest Sainsbury's best option is to differentiate itself with a more upmarket offer, accepting a lesser market share in the process.