ASDA Vs Tesco Prices

ADSA vs Tesco – which is cheaper? I thought ASDA was the cheapest of the Big Four (Tesco, ASDA, Sainsbury’s and Morrisons). After watching the latest Tesco advert last night, maybe not.

ASDA’s price guarantee has been promoted for a long while. Their guarantee is that ‘We’ll guarantee your comparable grocery shopping is 10% cheaper at ASDA or we’ll give you the difference’. This is clearly visible on their price guarantee site at asdapriceguarantee.co.uk.

Now, according to their latest TV advert, Tesco are claiming that their groceries are on a whole cheaper than ASDAs at tesco.com/pricecheck. Tesco’s new price promise guarantees to refund double the difference in the price of a product between Asda and Tesco, if you find it cheaper at ASDA after you’ve bought it at the supermarket. Surely one of them must be right?

Supermarket Price War

It looks like the Supermarket price war has just stepped up another notch. Both Supermarkets are actively encouraging consumers to compare each other’s prices online… and spending advertising money to do it! This does raise a few questions:

Which supermarket really is the cheapest?

As the price war marches on, clearly margins are going to be squeezed for both Supermarkets and any differences in price will become smaller and smaller. From a price perspective, that’s good for the consumer – competition always is.

After some research, I have found that ASDA was virtually always cheaper than Tesco for a typical shopping basket. Now, that margin is reducing. Tesco have chosen to play ASDAs game and compete with them directly on price. After all, we are in a recession and price really matters.

If you want to find out which of the two supermarkets is the cheapest for your shopping basket, my advice is visit the independent Supermarket price comparison website MySupermaket. That way, you can see at any particular moment in time which supermarket is the cheapest for what you’re buying (which answers the second question from the above list).

How can you be sure which is the cheapest, even using their comparison websites?

Again, my advice is use the independent Supermarket price comparison checker MySupermaket. However, what is not so easy using any of the comparison sites is price variations that exist between products that are virtually identical (but not branded the same) between supermarkets. Own branded products are an example. Special offers (e.g. but one get one free) may not be apparent using the online comparison websites either. You certainly won’t be able to compare ASDA branded milk in Tesco!

The comparison websites really only give you an accurate comparison if you know exactly what you want i.e. which groceries, what amounts and what brands.

For the same basket, which products are better quality?

You can never know this until you have tried the different products. For example, you may prefer a brand of bread that is available in one Supermarket, but not another and ‘quality’ can be subjective. If you tend to buy popular brands, the good news is that most popular brands are represented in ASDA and Tesco (and most other large Supermarkets).

If you’re interested in nutritional values for groceries, then these are listed on the MySupermarket website too.

What are the consequences of the price war?

The obvious positive benefit for consumers is cheaper prices. This is always the result of increased competition unless a cartel exists. As each Supermarket competes for more market share, they have to ‘up their game’ and give more value (either real or perceived) to consumers. Value is a combination of price, quality, variety, convenience, shopping experience and more.

Are there any negative consequences of the Supermarket price war?

I believe so. Below is a short list of potential negative consequences of the price war, which perhaps most people wouldn’t think about:

  1. As Supermarkets fight to drive down prices, they put an increasing amount of pressure on their suppliers, which includes farmers. This squeezes their profits and tends to move them towards increased efficiency and mechanisation. Think raw product quality, animal welfare and sustainable land use
  2. As Supermarkets earn less or sometimes no profit on their core products, they are compelled to look at other ways of generating revenue and profits. This includes selling a whole array of products from electrical, to financial services and holidays. Due to their huge buying and distribution power, this puts many existing businesses and jobs at risk in those sectors
  3. Some argue that Supermarkets being built in such large numbers across all areas of the country is good for job creation and on the surface, this is true. However, they’re not really creating jobs – just taking them away from other businesses that simply cannot compete e.g. smaller stores. On top of this, Supermarkets often do not spend money on services and suppliers in their local area thus not supporting the local economy. They have large national and international networks of suppliers and service providers, which means there is a net movement of money OUT of the local area
  4. Lack of variety and economic domination. As the variety of products you can buy in a Supermarket is increasing, the number of alternative places you can buy them at is decreasing. Carrying on from the second point above, as Supermarkets increase their market penetration even further, you will see an increasing number of smaller, local businesses fail. Because of the large number of products they already sell, they are competing with an ever increasing number of local businesses whenever they open a new store. This is even happening online. For example, Tesco Direct often out-competes other online retailers (even on eBay!)

Conclusion

There is a pay off between efficiency and low prices, and other economic and social factors such as variety, quality and job satisfaction (I can’t help thinking of most workers in Supermarkets and their distribution warehouses as cogs in a giant engine). Next time you shop at a Supermarket, perhaps you’ll look through the surface and view things a little differently. Or perhaps not.

© 2021 Michelle Tazur

Useful Links

MySupermarket – makes supermarket price comparison easier for you
The cost of the lowest price (funny video)
Independent insurance price comparison checker
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