Credit: Oast House Archives/Geograph

Asda boss Andy Clarke needs a Christmas miracle

The supermarket's sales are looking increasingly precarious.

by Jack Torrance
Last Updated: 18 Feb 2016

It seems ‘Asda Price’ doesn’t cut it anymore. The supermarket, which vies with Sainsbury’s to be Britains’ second-biggest, is on a run of seriously bad performance and it’s by all accounts the fault of the rapidly growing discounters.

Yesterday the supermarket, a subsidiary of the US behemoth Walmart, announced that like-for-like sales had slipped 4.5% in the thirteen weeks to September 30. That’s little better than the 4.7% dip in its previous quarter, its worst in 50 years. It’s perhaps even more desperate than the 3.5% rout in total sales attributed to the grocer by the latest Kantar Worldpanel grocery figures, published yesterday.

The data paints a particularly bleak picture for the supermarket. All of its major rivals are struggling but it seems that none has been hit quite so hard by the rise of Aldi and Lidl, which Kantar says grew by 16.5% and 19% respectively in the period.

‘There’s no doubt this represents another challenging quarter,’ said Asda chief exec Andy Clarke, apparently a big fan of understatement. ‘Sales volumes remain under pressure from price deflation and the intensely competitive background remains throughout the food sector.’

It’s perhaps no surprise that Asda has fallen prey to the discounters. It has always been at the budget end of the market, contrasting its prices with Tesco, Sainsbury’s and Morrisons. Now something has come along that can do the same but much cheaper.

There’s no doubt Clarke has one of the toughest jobs in retail this year, but he’s adamant he can make success out of dominating this no man’s land. ‘I’m confident that by reinforcing our offer we can further extend our price advantage over major competitors and close the gap against the limited assortment discounters (Aldi and Lidl) – not only on price, but across range, service and quality,’ he said.

Clarke’s attempts to ‘reinforce’ that offer began with a five-year plan to tackle the discounters head-on, which he launched in 2013. Given recent performance, that clearly hasn’t had the desired effect, so last month he announced a new 18-month strategy, dubbed ‘Project Renewal’, in a bid to up Asda’s game.

If that’s all a bit confusing, Clarke’s own words might help: ‘Last month I launched Project Renewal, an 18-month programme designed to work parts of my five year strategy harder to return us to long term, sustainable volume growth.’ Much clearer, right?

The specifics include cutting its range by 10%, ‘investment in a refresh of 95 large stores and delivering proposition stores to continue innovating and taking learnings on what really works for customers.’ Eh?

Asda’s most immediate challenge is making a success of Christmas, most retailers’ busiest time of year. Previously a big proponent of the annual sales orgy ‘Black Friday’, last week the supermarket announced it would shun the fire sale approach this year.

‘Instead of the hustle and bustle and pressure of one or two day sales where customers typically push the boat out on high-value items, this year Asda customers say they’d prefer deals on value-for-money, high-quality products that all the family can enjoy,’ it said in a statement.

That’s a big gamble. Sure, shoppers like to know they can get a good deal on Brussels sprouts and turkeys, but nothing gets people through the doors and makes the headlines more than massive cut-price TVs and an ensuing brawl to buy them.

Clarke has been in his role since 2010, much longer than any of his ‘Big Four’ counterparts - all of whom took the helm within the past two years. If he doesn’t deliver a Christmas of festive cheer then it wouldn’t be surprising to see him gone long before his 18-month plan reaches its conclusion.

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