ASDA has lost its mojo.
Once it was a people’s champion, flogging brand names like Levi’s (when Levi’s were fashionable which tells you how long ago this was) at rock bottom prices much to the fury of the big brand names.
Nowadays, it lacks the loyalty that Morrisons inspires.
It has none of the middle-class, ethical kudos that Sainsbury’s has maintained or the big portfolio of Tesco’s convenience stores.
Asda’s new boss Sean Clarke faced more bad news this week as the supermarket chain was named the worst performing grocer in the three months to September 11.
Sales at the beleaguered Leeds-based chain fell 5.4 per cent over the three-month period according to Kantar Worldpanel.
This was in stark contrast to discount rivals Aldi and Lidl which saw sales growth of 11.6 and 9.5 per cent respectively.
All the big four saw sales declines although Tesco’s was reduced to a fall of 0.2 per cent – its best performance since March 2014.
Bradford-based Morrisons saw a 2.3 per cent decline as it sees the fall-out from store closures.
Elsewhere, Morrisons saw an impressive 45 per cent increase in the number of online shoppers. Kantar Worldpanel said Morrisons’ online sales are doing particularly well in its Yorkshire heartland as well as in London.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “In Yorkshire it’s down to the strength of the Morrisons brand. If you live in Yorkshire you’re much more likely to shop online at Morrisons.”
Morrisons is enjoying a renaissance under CEO David Potts and his new team as they return the chain to its down to earth quality at low price roots whereas Mr Clarke is yet to make his mark at Asda.
“There is no sign of improvement at Asda yet,” said Mr McKevitt.
“It is still losing market share. Price cuts would have to be very substantial to have an effect. Asda is losing sales to the discounters and there is a general drift away from larger stores.”
Asda has a lot of big stores at a time when more people are shopping at smaller convenience stores.
“Asda needs to do the basics better. Its own label isn’t strong and it needs to make its stores more pleasant to shop in,” said Mr McKevitt.
Asda shoppers want the cheapest price they can get and Aldi and Lidl are offering just that.
Asda is currently around 10 per cent more expensive than the discounters and under previous management, it had plans to reduce this to 5 per cent. Perhaps it needs to go further.
Over the years of Asda’s ownership by global retail giant Wal-Mart, Asda has lost customers’ loyalty.
Wal-Mart’s decision to focus on profits rather than sales has meant shoppers have deserted it.
Analyst Clive Black at Shore Capital said: “Asda is in regrouping mode with a new senior team that is seeking to get to grips with multiple challenges.
“Asda needs to be more price competitive amongst a range of operational factors.
“We see a new approach by a new team seeking to stabilise the business, a retailer where better store standards, improved ranges and more personality are needed in order to re-engage with shoppers.”
Asda has no choice but to launch an all-out price war with the discounters.
Wal-Mart has the firepower to take on Aldi and Lidl and it needs to allow Asda to return to its roots of championing its shoppers rather than fleecing them.