Asda will take an aggressive stance on the grocery sector this year. But will its price strategy be enough to hold off the likes of Tesco and Morrisons?

Asda chief executive Andy Bond finally put everyone out of their misery yesterday with the grocer’s full year and fourth quarter update.

Since Christmas the rumour mill has been in full swing with whispers of “it only snows on Asda stores” and “those grocers with loyalty schemes won this Christmas” being heard across the sector.

Bond admitted that the snow had hit Asda more than any other grocer but vehemently denied that Asda had become ‘boring’ and vowed that the grocer was in good health.

While Asda clearly isn’t in a bad place – it recorded like-for-like sales in its fourth quarter up 4.6% and full year like-for-likes up 6% - it is conscious that the grocer needs to step up its game in certain areas.

One area is reinforcing its strategy of Every Day Low Prices. Bond said Asda – and the sector – had become too promotional and that clouded its EDLP strategy. He said Asda will reduce its reliance on promotions, and that he has suppliers on his side in this battle.

It will be a difficult job to persuade the rest of the sector to play ball though. If Tesco or Morrisons see an opportunity to outmanoeuvre Asda with promotional tactics then surely that’s what they will do?

Bond thinks not. He pointed out that Tesco boss Sir Terry Leahy has also said previously that the sector is too promotional. Bond believes that all grocers are suffering from the intense promotional price wars, and this will eventually even out.

It remains to be seen whether customers will fully understand Asda’s EDLP stance. Clearly it has worked for the grocer in the past, but the recession has meant that shoppers are increasingly promiscuous. If they think they will get a better deal five minutes further down the road, then they will give it a try.

This was highlighted on Bond’s live online customer web chat yesterday. One shopper, who spends around £5,000 with Asda a year, asked why Asda doesn’t also offer a loyalty scheme. Asda explained that if the shopper did the same grocery shop at another supermarket he would have had to spend an extra £250-£500 – and that’s the saving you get shopping at Asda.

Asda just needs to get this message across, and with the other grocers snapping at its heels, that won’t be easy.

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