Asda admits tough year despite slashing prices

The low-cost supermarket has posted a fall in festive sales despite ramping up price cuts.

by Elizabeth Anderson
Last Updated: 20 Feb 2014

Asda said store sales fell 0.1% in the 13 weeks to January 3 compared to the same time the year before.

The slip came in spite of price cuts totalling £60m over the Christmas quarter, as the UK’s second biggest supermarket chain stepped up the battle with budget chains Lidl and Aldi.

Overall, sales for 2013 were up 0.5% and CEO Andy Clarke said it had been ‘a tough year’ as UK retailers were preparing to adapt to a ‘significant and permanent structural change.'

Asda announced a £1bn investment in price cuts in November to attract more customers shopping on a budget.  Aldi and Lidl have been stealing away the discount market and have seen their market share grow to a combined 7.3%.

Christmas sales at Aldi and Lidl were up 20% and 10% respectively year on year, while the UK’s ‘big four’ grocery chains had a lacklustre festive season. Like-for-like sales at Morrisons fell 5.6% in the six weeks to January 5 and Tesco sales were down 2.4%. Sainsbury’s saw sales rise 0.2% in the 14 weeks to January 4, but the supermarket warned that customers are likely to ‘spend cautiously’ in the first few months of 2014.

Asda said it plans to spend £750m this year opening new stores and investing in ways in which people can access the chain more easily. Late last year it announced plans to let customers collect their shopping from London tube stations to capitalise on shoppers' increasing demand for ‘click-and-collect’ options.

The grocer will also focus on expanding its reach beyond London and the south east, as it aims to increase physical access to its brand from 53% to 70% by 2018.

‘We’re playing the long game and the decisions we’re taking now will ensure the long-term growth and health of our business and do the right things for our customers. This year alone, we will invest £200m into lowering prices and £750 million in further developing our estate,’ Clarke said.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today