Asda feels the pain from the Tesco revival

​ASDA is paying the price of Tesco’s recovery with its worst sales performance in more than 20 years as Tesco wins back shoppers by slashing prices.

Tesco has seen a renaissance under new chief executive Dave Lewis. It has enjoyed its best performance in 18 months, according to the latest figures.

Leeds-based Asda has benefited from Tesco’s slump over the past few years, but a renaissance under new boss Dave Lewis led to Tesco’s best performance in 18 months, according to the latest data from Kantar Worldpanel.

Tesco’s sales rose 1.1 per cent in the 12 weeks to March 1, giving it a flat market share of 28.7 per cent (down very slightly from to 28.8 per cent) whereas Asda’s sales fell 2.1 per cent, taking its market share from 17.5 per cent to 17.0 per cent.

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​Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Asda is really in the firing line from Tesco.

“85 per cent of Asda shoppers went to Tesco in the last 12 weeks. It’s not that Asda is doing anything wrong, it’s Tesco coming back.”

Asked what Asda can do to win back custom, Mr McKevitt said the grocer is already taking action.

“Asda is famous for doing round pound pricing, but in recent weeks products haven’t been £1, they have been 95p. We are yet to see the effect,” he said.

Asda’s 2.1 per cent decline was its worst performance since Kantar data started in 1994.

​Last month Asda blamed a fall in sales on the unprecedented use of discount vouchers by its rivals and warned the practice was unsustainable.

Morrisons and Sainsbury’s both saw lower than average growth with sales falling by 0.4 per cent and 0.5 per cent respectively.

Morrisons’ market share stabilised, from 11.1 per cent to 11.0 per cent, but this was against very weak comparisons.

The Bradford-based chain is yet to see the effect of changes introduced by new chairman Andy Higginson.

Mr Higginson is expected to announce plans this week to slash the group’s dividend in order to pay for investment in the core supermarket chain. At the same time he is likely to call time on plans to open 100 convenience stores a year in order to go back to basics.

He believes that many customers want to shop at Morrisons, but feel it has lost its way and so have decamped to the discounters.

Kantar data showed that Aldi has achieved a new record market share of 5.0 per cent, up from 4.3 per cent, while Lidl’s market share rose from 3.1 per cent to 3.5 per cent.

Aldi saw sales increase 19.3 per cent and Lidl saw sales rise 13.6 per cent, but this is a slowdown on their previous stellar performance.

“Aldi and Lidl’s sales growth will slow further,” said Mr McKevitt.

“We will see growth rates come down to high single digits to the early teens by the end of the year.”

Kantar said that the overall grocery market increased sales by 1.1 per cent in the 12-week period, while deflation reached a new low of minus 1.6 per cent as price competition between the rivals stepped up.

“All of the major supermarkets are cutting prices to win shoppers,” said​​ ​Mr McKevitt​.

The supermarket price war and lower inflation have saved shoppers £400m over the past 12 weeks, which equates to a saving of £15.15 per UK household.

“All of the major supermarkets are cutting prices to win shoppers, especially within everyday staples such as eggs, vegetables and milk,” said​​ ​Fraser McKevitt​ at Kantar Worldpanel.

As prices fall, shoppers are finding themselves better off each month and are typically treating themselves to trips to the cinema, meals out and treats for kids. Kantar said retailers are focusing on simple price cuts rather than complicated multibuy deals.