ASDA Have Abolished End-of-Day Price Reductions in All Their Stores

 

ASDA recently joined the other majors and the discounters in reducing the price of milk and there has been much hype in the media about this. 

However what has not yet been extensively reported is an important policy change on price reductions which, I suspect, they were hoping to introduce ‘by stealth’ while consumer focus was diverted elsewhere. This move will have a far greater effect on some of the prices we pay than a few pence off the price of a ‘pinta’ – read on to find out why…

Some Background

I recently revised an article which was first published last autumn on supermarket food. This was a time when the cost-of-living crisis was beginning to hit us all hard. The article was primarily aimed at highlighting food waste and what we could do to reduce it, thereby saving ourselves money and helping protect the environment.

What emerged at the time was that many people were already finding it necessary to use food banks to feed their families adequately, and those that were either not entitled to use them, or were simply too proud to admit their need publicly, were going without. It seemed to me that in a first-world country which still boasts the sixth largest economy in the world, something was badly wrong and urgent action was needed.

It was also apparent that large quantities of perfectly good food was being wasted at the end of each day by supermarkets because it had reached its sell-by date. It therefore seemed a good time to look at how these businesses could help their communities by disposing of some of this food more effectively before it actually reached its expiry date and became unsaleable. There is a strong economic and environmental case for doing this, and it actually saves the supermarket money.

Another question I considered in a separate blog was whether supermarkets were playing fair with their budget ranges. These were originally designed as cost-cutting loss-leaders to encourage shoppers into their stores, and so were always going to be vulnerable when profit margins were squeezed, and were starting to disappear from supermarket shelves.

The conclusions I came to at the time were not encouraging.

On food wastage, although most supermarkets do reduce fresh food items on their sell-by dates, this is not universal, and the price reductions that are made rarely exceed 65-70%, even late in the day. Given the sky-high (and still rocketing !) food prices we are now faced with, thanks to Brexit and Putin’s Ukraine ‘adventure’, even this level of  price reduction leaves the items unaffordable for some.

What Just happened ?

In fairness, I should first mention that some retailers (notably ASDA) have in the past implemented more enlightened policies that allow greater discretionary reductions at the end of each day by store managers and their staff to ‘clear the shelves’.  A sizeable number of customers have come to depend on this ‘largesse’ in recent months just to make ends meet.

Sadly, in ASDA’s case this practise looks as though it may have come to an abrupt end last week, thanks to a frankly crazy decision by ASDA Central Office….

When visiting my own local ASDA branch late last Wednesday, I noticed that the usual final markdowns had not been made. I was told by staff “..sorry, but the system isn’t allowing us to do the usual markdowns today…”. 

It was obvious that none of the staff had been informed as to why this was happening, and it was put down to one of the many stock control system ‘glitches’ they had experienced recently. A follow-up visit the next day revealed that the reason for the system blockage that had emerged was that ASDA management had decided to ban final markdowns with immediate effect, and had implemented this overnight on Tuesday via their stock control system.

The only reason given for this decision (and the ensuing chaos) was ‘…fewer items are being left at the end of the day nowadays’. The decision also appears to have been unilateral and made without consultation with consumer groups, or even their own staff. To cap it all, ASDA central office had not even bothered to cascade this information down to the ‘shop floor’ before implementing the change – even four days later, staff normally responsible for final markdowns in our local store were still unaware of the change, and actually had to be briefed by their customers as to why they could no longer do their job properly.

The rather lame ‘excuse’ given for this decision is in itself is manifestly untrue – on previous occasions when system failures have prevented final price reductions on that day, it was evident that much more produce was left unsold on the shelves towards closing time, as confirmed by store assistants the following day. Even before the change when final reductions were still permitted, it was obvious that the number of unsold items left at the end of the day was increasing week by week, presumably due to buyers being forced to tighten their belts by cutting down their weekly shop. This trend had been particularly noticeable with some of the higher-cost branded items.

The Consequences

The most important consequence of this decision is, of course, is a moral and social one – considerable numbers of the least well-off members of local communities throughout the UK will have come to depend on the low prices previously available through this scheme. This is particularly relevant where an ASDA store is the only reasonably-priced food outlet in the nearby area.

Apart from the obvious harm to the worst off in the community, by introducing this new policy, ASDA is now also causing additional damage to the environment by generating significantly more food waste. This will all have to be incinerated or go to landfill, since it cannot legally be sold or donated to food banks after its expiry date.

Last, but not least, it will also cost ASDA more – every kg of food ‘waste’ they send to landfill will incur a charge of at least 20p at current disposal prices.

And the timing of this decision couldn’t really have been worse - for those dependent on ultra-low prices and for ASDA - here’s why…

ASDA will inevitably alienate a significant element of its customer base by doing this – it’s a well-known psychological trait that humans perceive it as far worse to take something away than not to provide it in the first place – particularly if the benefit has been highly valued by those receiving it. 

Our perception of ‘fairness’ is also a powerful force in our decision-making – we all recognise that those in our society who have the least need extra help, and the cost of living crisis has sadly ensured there are more and more people being put in this unfortunate position. Any business that is seen to operate solely in pursuit of maximising profits and fails to recognise this important ‘driver’ of our psychology is likely to get short shrift from public opinion nowadays, particularly if they also disregard environmental concerns.

Food retailing is also highly competitive at present and, quite literally now, ‘price is all’. It’s widely acknowledged that the major supermarkets are all haemorrhaging customers to the discounters in the quest for the cheapest prices - both ALDI and LIDL have already embarked on an aggressive store-building programme to take advantage of this opportunity. No part of the UK is immune from this, and an existing supermarket with a new ALDI or LIDL store in prospect or already located close-by will be even more prone to lose hitherto loyal customers, and would be wise to ‘look to its laurels’ very closely.

What can we as consumers do about it ?

Social media is the obvious starting point – most large organisations, although frankly dismissive of individual approaches via their customer service departments, do respond to adverse comments on social media, particularly if they ‘go viral’.  The majors also all make a great song and dance about ‘benefiting their local community’ – this appears as a key question on every online customer survey, and implies an acute sensitivity to local public opinion.

The most obvious and effective weapon we have at our disposal is, of course, our feet – and we should certainly all ‘vote with them’ if we are dissatisfied with their policies.

Complaints direct to local ASDA store managers may also help here - decisions such as this one, obviously made by higher management, given their global nature, are rarely made after full consultation, and some adverse feedback from staff  ‘at the sharp end’ passed on from irate customers may just make the policy makers think again. Direct approaches via email from thousands of irate customers to a company's CEO can sometimes make an impression by clogging up the works - this worked for Tesco's HUDL tablet debacle in 2019, so might be worth a try... 

Our consumer champions could also make a major contribution. Jack Monroe’s sterling efforts this time last year effectively shamed ASDA into offering their full range of Smartprice budget products in all their stores. This made a big difference in affordability, particularly for those who can’t afford a car and don’t live within easy reach of a superstore. However, closer inspection more recently reveals that a number of these products are slowly but steadily being removed from the shelves ‘by stealth’, and those that remain are frequently allowed to go out of stock before they are eventually replenished. Not surprising, perhaps, in these days of ever-tighter profit margins, but a definite betrayal of trust nevertheless.

Another disturbing trend that has been reported of late is that ASDA have shown the most rapid and extensive price rises of all the majors since the takeover from Walmart by the Issa brothers and TDR Capital. This is particularly true of what remains of their ‘Just Essentials’(=rebranded Smartprice)  budget range. There is a message there, I think, and not a very encouraging one for any ASDA customers who are ‘on the ropes’ financially.

In yet another twist to the ASDA saga, the Issa brothers bid to take-over the Co-op's 132 petrol stations and attached grocery stores has already attracted the attention of the CMA, who have ruled that it is likely to reduce competition, and have gone as far as issuing an SLC notice. This suggests The Issas' aim may well be to maximise profits in advance of a sale in a year or so's time, netting them a large profit in the process. If so, they will have scant regard for the views of staff or consumers. Staff are already reporting unfavourable contract changes since the takeover, resulting in reduced hours, subsistence wages and increased time pressure, which is leading many of them to reappraise whether their interests are best served by staying with ASDA. This is already leading to increased levels of staff turnover and unfilled job vacancies at 'ground level' - not good news in today's particularly tight labour market. 

The Issas' acquisition of ASDA from Walmart was also at a knockdown price of £200M, so their returns on any future sale could be substantial - I'll leave it to the reader to decide whether this behaviour pattern is morally acceptable in the middle of a cost-of living crisis...

As a final thought, I would encourage anyone with a social conscience to put this question to the new ASDA management:

“..How will depriving the worst-off in society of food that is still wholesome, but would otherwise go to waste, benefit the local community ?”

ASDA really needs to think again, and before it’s too late…. customers who desert them for ‘greener pastures’ are unlikely to return.

See also: ASDA Have Abolished End-of-Day Price Reductions in All Their Stores: The Aftermath for more developments and analysis.

Firs published 17.4.23