Walmart, the US Retail giant that owns Asda, has pledged to be 10% cheaper than any of its rivals or to refund the difference to its customers in light of the recent VAT increase to 20%.

The announcement means the retailer makes a marked improvement to its price guarantee, introduced in April 2010, to be at least 10% cheaper than any of its competitors.

The current price promise enables customers to check the price of their grocery shopping online through independent price checker mysupermarket.com

If Asda is not the cheapest, it refunds the difference, plus a penny.

As part of the new scheme, if the retailer is not 10% cheaper than all large rivals, it will refund the difference through a voucher to make up the shortfall, which customers can spend at their next shopping trip.

Asda would not disclose the amount that the price promise will cost.

Andy Clarke, Chief Executive of Asda, denied that the move would create any additional pressure for suppliers.

He also rejected the notion that the scheme was a gimmick or the start of a new supermarket price war.

Mr Clarke added that Asda was cheaper on nine out of 10 baskets of supermarket items compared through the price guarantee, and its was 8% cheaper on those nine baskets.

A number of rivals have suggested that customers were looking for cheaper prices in-store rather than through complex promotions, and that the amount refunded through the price checker so far was modest.

Please note the views expressed in this blog are the views of the author, Andre Brown and do not represent the view of Locayta, its employees or its shareholders. For more information about Locayta, visit www.locayta.com