Asda to Abandon EDLP

Wal-Mart owned retailing giant Asda is stepping back from every day low pricing (EDLP) in an effort to compete with Tesco and Sainsbury. Wal-Mart upended the conventional wisdom on retail promotional strategy by avoiding sales and coupons. This eliminated the tendency of buyers to wait for sales, a vicious cycle for retail profits. Wal-Mart did quite well as a result, but the European market has proved more challenging. Asda has lost share to Tesco and Sainsbury (see chart and story) over the past several years and now the firm is looking for a way to drive customers to stores through promotions.

Major shifts in pricing strategy are essentially re-branding efforts and require both careful planning and execution. And a bit of luck when it comes to fickle consumers. The article quotes a company spokesman as saying, “We have stepped up promotional activity. It’s a very competitive market. This is not at the expense of every day low prices, it is the cherry on the cake.” When it comes to price positioning in the mind of the consumer, you can’t have your cake and eat it, too.

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