The data from RAC states that Asda no longer holds the title of being the “most cheapest retailer”
As per data Asda fuel has become the most expensive fuel retailer among the supermarket groups in the UK. An analysis was published by RAC which states that the average prices of petrol and diesel were higher at Asda compared to the prices of Tesco, Morrisons and Sainsbury at the end of May.
Asquith brothers approached Associated Dairies in 1965, proposing to run the butchery departments within their small stores. That was the beginning of a merger and the emergence of the name Asda (Asquith+Dairies). Ever since then, this retail group was the first discounter grocery store in the UK that offered the best value to its customers. For years the group took pride in being the “cheapest in the market” but recently ditched their long-held pledge.
The data from RAC states that Asda no longer holds the title of being the “most cheapest retailer”. Towards the end of May, Asda’s competitors, Tesco, Morrisons and Sainsbury were selling petrol at an average price of 2.1p per liter less than Asda. Furthermore, the gap for diesel is much wider with a difference of 2.5p per liter.
Rod Dennis, a senior policy officer at RAC said “It’s interesting to see that the retail group no longer holds the crown for selling the cheapest fuel, despite the pledge made when it was subject to a merger a year ago. The other three major supermarkets, as well as some enterprising independents, now offer lower prices.” The pump prices should be falling much faster to reflect a decline in wholesale costs, he also added.
Asda will be unable to regain its position any time soon with the falling fuel prices as the rivals were likely to lower their fuel prices to maintain their lead and move upwards.
Supermarket chains were not passing the savings on to the customers despite the fall in global fuel prices, said RAC
The Competition and Market Authority CMA said last year, Asda took over 132 Co-op petrol stations for £600 million which could increase prices or would mean that the consumers would have less choices as it raised competition concerns. In Asda’s defense, the group told CMA that the merger would be able to offer its low-cost pricing model to more customers and concerns of competition would not arise.
In 2021 the supermarket was taken over by the Issa brothers and a private equity firm TDR Capital and shifted its pricing strategy. The main source of income for the Issa brothers comes from petrol forecourts. When Asda bought the UK and Irish operations of petrol station giant, EG Group, Mohsin Issa said the deal would enable him to offer “Asda’s highly competitive fuel” to more customers.
According to a report by CMA in July, 2022 there is a change in Asda’s target fuel margin. The difference between pump price and the cost of fuel had tripled in 2023 when compared to the numbers in 2019. Regardless of this, Gary Lindsay, Capital Managing Director of TDR in January told the Commons Business and Trade Committee that Asda group had no particular strategy or plan to bump the fuel prices or even try to make a larger profit on fuel. Rod Dennis, the officer at RAC said that the decline to be reflecting on the wholesale costs, the pimp prices should be falling much faster.
A spokesperson at Asda states that they will focus on providing their customers the best value at the fueling stations while growing into a convenience store. They reduced prices in May by a combined average of 2.31p per liter.
In 2022 Asda was the first supermarket that helped motorists to check the prices of petrol or diesel before travelling to one of the supermarket filing stations by publishing local fuel prices online.