Published On: Wed, Mar 19th, 2025
Business | 4,290 views

4p Asda petrol change sparks ‘price war’ with Tesco and Sainsbury’s | Personal Finance | Finance

Britain’s biggest supermarkets have suffered a £4billion wipeout as Asda declared an all-out price war, slashing grocery and fuel costs in a desperate bid to win back customers.

Tesco, Sainsbury’s, and Marks & Spencer saw their share values tumble as investors braced for brutal price-cutting that could send profits into a tailspin.

Asda’s new chairman, Allan Leighton, has vowed to make the struggling chain “incredibly competitive again,” launching the biggest investment in pricing since his first tenure at the retailer in the late 1990s.

The news is a win for millions of shoppers and will force the chain’s rivals to respond with their own price cuts.

The supermarket has already cut petrol and diesel prices by 4p per litre across its forecourts, undercutting rivals and sending shockwaves through the fuel market.

Experts warn the move could reignite the competition that had cooled following Asda’s 2021 takeover by private equity firm TDR Capital and the Issa brothers, which saw prices stagnate at artificially high levels.

Tesco, Britain’s largest supermarket, took the heaviest hit, with shares dropping more than 12% on Monday. Sainsbury’s fell by 8.5%, while M&S saw a 7.5% decline, spurred by fears of shrinking margins as the sector braces for aggressive discounting.

Analysts say the industry is facing a rapid shift, with one warning: “Any grocer caught flat-footed in this changing environment could suffer.”

Asda’s market share has plummeted from 14.6% in 2021 to just 12.6% today, bleeding customers to Tesco and Sainsbury’s. But Leighton insists his “war chest” of investment will reverse the slide, funnelling millions into price cuts and store revamps.

“This will be the biggest commitment to Asda Price and Rollback since I first launched them,” he declared, signalling a return to the chain’s roots as a ruthless price-cutter. The relaunched “Rollback” scheme, now fronted by fitness guru Joe Wicks, has already slashed prices on hundreds of products.

Retail expert Natalie Berg added: “Leighton knows exactly how to make Asda a powerhouse again. His strategy is bold, but the key question is whether it will be enough to shift customer loyalty back in Asda’s favour.”

Asda’s petrol price cuts have sent ripples through the market, with calls for other retailers to follow suit. RAC spokesman Simon Williams hailed the move, urging rivals to “pass on savings from lower wholesale costs.”

“The longer oil stays around the $70 mark, the more likely we are to see petrol hit its lowest price in four years,” he added.

Yet experts warn the supermarket sector faces serious pressure. Tesco is hiking staff wages by 5.2% to at least £12.64 an hour, while axing Sunday shift bonuses to balance the books. National insurance changes and rising operating costs are further squeezing margins.

Retail analyst Clive Black cautioned that while Asda’s aggressive strategy will shake up the industry, “Tesco and Sainsbury’s are still stronger grocers with broader customer bases and deeper pockets.”

Meanwhile, Shore Capital analyst Darren Shirley warned: “The supermarket price war is far from over. This is just the beginning of what could be a prolonged battle for market dominance.”