Blackfriar: Is Asda finally shrugging off years of under performance?

The entrance to Asda's head office in Leeds, as the store has been named named the cheapest supermarket of 2016

The latest Kantar Worldpanel figures show that its sales fell 1.9 per cent in the 12 weeks to January 29 - the only big supermarket chain to see a fall in sales. However this is far better than previous sales declines.

Its all time low was last August when it reported its worst ever fall in quarterly sales as shoppers ditched its stores in favour of the discounters, underlining the mammoth task facing new boss Sean Clarke as he attempts to lure back shoppers.

Leeds-based Asda said like-for-like sales fell 7.5 per cent in the three months to June 30, which was a lot worse than the 5.7 per cent fall in the three months to March 30 and represents the eighth consecutive quarter of decline. This came as a major disappointment to the firm at a time when arch rivals Tesco, Sainsbury’s and Morrisons were reporting improving underlying sales.

However the latest Kantar Worldpanel figures indicate that Mr Clarke is slowing turning the tanker round.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said that Asda’s most important improvement is getting more shoppers through the door.

“They are doing a better job at appealing to their core shopper,” he told the Yorkshire Post.

“Lower middle class families are returning to the store. They are also keeping a sharp eye on prices.”

Research by Which? found that Asda was cheaper than its big four rivals - Tesco, Sainsbury’s and Morrisons - during 2016.

Which? compared the price of a basket of 80 brand name goods. The price at Asda was £154.14, some £6 cheaper than Morrisons which charged £160.19. Sainsbury’s charged £162.11 and Tesco charged £164.37.

However discounters Aldi and Lidl are not included in the Which? survey as they don’t sell enough branded products.

Asda’s problem is that its big four rivals have clear attributes that it lacks. Tesco has size - it is by far the biggest player with 28.5 per cent of the market (Sainsbury’s has 16.8 per cent, Asda has 16.2 per cent and Morrisons has 10.8 per cent).

Sainsbury’s has class and quality. Middle class shoppers don’t mind paying extra as they trust Sainsbury’s.

Meanwhile Morrisons has heritage and a trusted “farm to fork“ strategy. People like Morrisons and what it stands for - especially now David Potts is at the helm and returning the firm to its quality and value roots.

Asda, which was bought by the world’s biggest retailer Wal-Mart in 1999, has no unique selling point other than it’s cheap. It’s a far cry from the days when it was the consumer’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.

So how is parent Wal-Mart planning to fix this? It’s going to reduce prices further, improve the look of Asda’s stores and enhance product lines. In addition Asda is going to market more Wal-Mart brands as its own at a lower price than rivals.

Analysts said the latest Kantar Worldpanel data shows the good work being done by Mr Clarke and former Sainsbury’s executive Roger Burnley. This includes making Asda stores cleaner and less cluttered, with more staff on the shop floor and better availability of fresh produce and meat.

Analyst Clive Black at Shore Capital said there are signs that Asda is stepping up product innovation with new frozen and chilled items and more “Extra Special” products.

It has also developed complementary services within stores, such as sports retailer Decathlon and butcher McGee’s, while more freedom is being given to individual managers on the layout of their stores.

Asda is back on the right track, but it may take several years for it to regain its former glory.