Blackfriar: Good news rolls out for Asda but more needs to be done

Roger Burnley, the '‹new Yorkshire-born chief executive of Asda, appears to have made good progress since taking '‹on the top role'‹ on January 1'‹.
Undated handout photo issued by Asda of Roger BurnleyUndated handout photo issued by Asda of Roger Burnley
Undated handout photo issued by Asda of Roger Burnley

It’s early days, but Asda reported its fourth consecutive ​increase in sales​ earlier this week,​​ although like-for-like sales rose just 0.5 per cent in the last three months of 2017.

In November, the Leeds-based group reported a 1.1 per cent increase in like-for-like sales in the three months to September 30, so this represents a fall in sales growth.

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Asda said the latest figures show ​its improving performance in the market, following reports in January that Asda was the only one of the ​big four supermarkets to hold its market share in December.

​Mr Burnley said colleagues should be proud of this performance, which he said was a testament to their hard work during the all-important Christmas trading period.

He pointed to an improved offer for customers – combining product innovation with a focus on value and an easy shopping experience.

He said the supermarket chain is “absolutely focused” on doing the right things for customers to accelerate momentum and build trust.

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His plan is to increase the focus on Every Day Low Prices with the launch of ‘Rolled Back Staying Back’, continued innovation in Asda’s own brands and making it easier for customers to shop at the store chain, which is Britain’s third biggest grocer.

The latest data from industry experts Kantar Worldpanel showed improving sales at Asda​ with sales growth of 2.2 per cent in the 12 weeks to January 28.

Kantar Worldpanel said Asda encouraged shoppers to add extra items to their baskets and the grocer particularly saw strong growth in the alcohol, frozen and chilled aisles.

However, the firm is battling against stiff competition from discounters Aldi and Lidl, which are around 15 per cent cheaper than Asda, which is ​frequently ​the cheapest of the big four grocers.

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Analyst Clive Black at Shore Capital said Asda is s​howing good improvement in store standards, merchandising and the presentation of its value proposition​.

The first Yorkshireman to take the helm at Asda in over 30 years, Mr Burnley was born in Dewsbury and describes himself as a “born and bred Yorkshireman”.

He first joined Asda in 1997, before being headhunted by Matalan in 2002.

He rejoined Asda last year as chief operating officer with the expectation he would become chief executive over time, but his accession was faster than the market had expected.​

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He is seen as an experienced grocer who knows what he is doing.

However, there remains a good deal more for Mr Burnley to do​ and the top team is showing increased focus on Every Day Low Prices and trying to keep prices lower for longer.​

This is a good start to Mr Burnley’s tenure and Asda has definitely turned a corner, but it has a long way to go if it is to tempt back shoppers from German discount rivals Aldi and Lidl.

All this is happening at a tough time for consumers with wage packet rises failing to match higher inflation.

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Laith Khalaf, senior analyst at Hargreaves Lansdown, said the consumer squeeze is still alive and well, and the pick-up in wage growth anticipated by the Bank of England is yet to materialise.

“For UK consumers, pennies remain a precious commodity, so we can expect continued pressure on the retail sector and a focus on discount shopping as a result of tight household budgets,” he added.

Mr Burnley faces a tough time ahead as cash-strapped shoppers turn to the discounters.

Asda’s American parent company Walmart has kept its focus on profit rather than sales for far too long. It can’t treat Asda like a cash cow.

In this difficult consumer market, Asda needs to be allowed to cut its prices if it is to compete effectively.