Asda joins Big Four rivals in negative sales territory

ASDA today succumbed to the intense market pressures engulfing its Big Four peers by reporting a fall in quarterly like-for-like sales.

Andy Clarke

The Leeds-based retailer reported a 1.6 per cent “step back” in like-for-like sales in the 13 weeks to September 30, but said it has grown market share for the second consecutive quarter.

Today’s announcement means that Tesco, Asda, Sainsbury’s and Morrisons are all now in negative sales territory.

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Asda had previously managed to achieve sales growth in a sector bedevilled by competition from German retailers Aldi and Lidl and pressure on household finances.

Speaking at a briefing in London today, Asda chief executive and president Andy Clarke stated that although no CEO wants to report a negative comp, he was pleased that in a distressed market for all major retailers, Asda is outperforming its traditional competitors and gaining market share.

Asda saw 0.6 per cent growth in like-for-like sales in the second quarter, but noted that the retail market as a whole has slowed significantly in the third quarter.

Asda said it remains the only one of the traditional supermarkets to have grown market share in the period, up 9bps to 17.3 per cent.

Mr Clarke said that Asda took early action to address the changes within the retail market 12 months ago by implementing a five-year strategy to cut prices, costs and develop innovative retail formats both online and in the store environment.

He said that Asda had continued to deliver this strategy “with agility and pace”, reporting a 19.6 per cent growth in online shopping.

This was the supermarket’s 10th consecutive month of above market growth and the launch of two large store trials in Coventry and Grantham.

Mr Clarke said: “A year ago we took clear action to address the changes in our market and implement a five year strategy to redefine value retailing.

“That is a long term strategy that won’t be delivered overnight, but our early, decisive action has seen our business outperform our traditional competitors in a market that is in unprecedented distress.

“We have a clear understanding of the challenge we face as a business. When I launched our strategy a year ago I said that the market was beginning to polarise between the premium retailers and the discounters – and the traditional players would be squeezed.

“Asda has begun to step away from the Big Four and outperform its traditional competitors. We have more to do on the discounters – but we continue to close the gap on price and offer ten times the range across stores and online.”

He added: “The last quarter has seen a shockwave go through our industry and others are starting to respond to the challenges they face. I expect that we will see another tough quarter and I’m under no illusions that the battle continues to rage.

“A new reality is upon us and although we were the first to adapt, we need to do everything to remain ahead of our traditional competitors whilst removing reasons for customers to go to the small discount shops. That’s the strategy we are on and we need to keep accelerating it.

“We won’t be knee jerked into reacting to short term tactics. Vouchers can win quarters, but strategies win decades.”