Credit: morebyless/Flickr

Asda defiant despite 2.6% sales slump

The supermarket is unapologetic for its 'leading' role in the food price war.

by Jack Torrance
Last Updated: 18 Nov 2015

It’s probably safe to say Asda didn’t have the Christmas gift it had been hoping for. In the 12 weeks to January 4 the supermarket’s sales slumped 2.6% year-on-year. That led to sales for the whole year falling 1%.

The news follows similarly negative updates from Asda’s 'Big Four' rivals – although the different reporting periods makes it difficult to compare them directly.

Tesco fared particularly badly with group sales excluding fuel down 2.7% in the 14 weeks to January 4, while Morrisons’ sales (also excluding fuel) were down 1.3% in the six weeks to that same day. Sainsbury’s non-fuel sales were down 0.4% in the 14 weeks to January 3.

Asda chief exec Andy Clarke acknowledged that retail was in ‘one of its most challenging and changeable periods in history,’ but was adamant he had a plan to get things back on track.

‘The first year of our plan was very much about building the foundations – a work out to limber us up for what is to come in 2015 – by leading the price agenda in a deflationary market,’ Clarke said. ‘We have a clear plan for sustainable, profitable growth and creates a proposition that gives customers what they want.’

The chain is unapologetic for adding fuel to fire of the supermarket price war, boasting in a statement that its top ‘win’ of the year was ‘a £300 million investment in lowering prices in 2014 - £100m more than planned as part of [a] five year pledge to invest over £1 billion in reducing the cost of living for its customers.’

This year Asda’s planning £600m for the creation and refurbishment of stores, including 17 new supermarkets and 36 new petrol stations, although there's still no word on whether it will be following its competitors into the convenience store market.

Asda's defiance is perhaps because, unlike its competitors, it has the benefit of its massive American backer Wal-Mart to help it weather the storm. But unless Wal-Mart buys out Aldi and Lidl, Asda's problematic competition is unlikely to go away any time soon.

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