ASDA chief executive critical of product premiumisation

May 22, 2009

The ASDA supermarket chain chief executive, Andy Bond, has been openly critical of the product “premiumisation” practiced by some retailers, which he believes isn’t fooling the prudent UK grocery shopper.

Bond asserted that one of the important business lessons of the last decade is that you cannot charge what you think consumers can afford to pay.

“Through this period of what you might call ‘abundance’ – abundance of debt and abundance of consumption - many businesses lost sight of the basic principle of delivering good honest value in what they provided for customers,” he said, adding: “Too many business focussed more time on margin enhancement and charging what people could ‘afford’ rather than providing added value.”

Bond went on to say: “This will be known as the fraudulent era of ‘premiumisation’ where the key mantra was manipulating people to ‘trade-up’. Getting people to pay substantially more for things that offered only marginal (if any) real benefit or added value.”

Although there are products worth paying more for, according to the supermarket executive, in too many cases items that are called “premium” do not offer a real difference – and customers are moving away from them.

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