Asda is urging suppliers to give discounts and cash contributions worth millions of pounds, so it can counter the rise of Aldi and Lidl by cutting prices.
The supermarket giant, which is expected to reveal a sixth consecutive quarter of declining sales on Thursday, is meeting with its suppliers to discuss ways to slash prices by as much as 10%, according to trade journal the Grocer.
Template agreements distributed to suppliers also beg for other payments, or “incremental investment”, to cover the costs of promotions and other initiatives.
The range of products offered in some categories could also be slashed by as much as 25% as the grocer aims to push up volumes on the narrower range of items so that it can get better deals from suppliers in return for improved efficiency. On average, Asda has said it will trim ranges by a tenth.
Andrew Moore, Asda’s chief merchandising officer, said: “Value is an important part of it. You can see what’s happening with the discounters and other competitors. We have got to make sure our customers are getting the best value we can give them. This isn’t Asda coming in with a big bat and trying to make suppliers hit a particular price point. We are talking to big suppliers about what we know customers want in terms of range, assortment and quality and working with them to provide that.”
Andrew Moore also said that Asda was working closely with Christine Tacon, the groceries code adjudicator, to ensure its negotiations met regulatory requirements.