Cut-price Asda outshines rivals

Archie Norman's price-cutting tactics have made Asda the most improved performer in the supermarket wars. Meanwhile Tesco is continuing to outperform arch-rival Sainsbury's with Safeway back in fourth place.

The trends are indentified in the latest market share figures from AGB, the market research group. They show that in the four weeks to 2 June, Tesco increased its UK share to 21.1 per cent against 20.7 per cent the previous year. This makes it the clear market leader ahead of Sainsbury's, whose share has fallen from 19.1 to 16.6 per cent. Asda has consolidated its position as number three in the market ahead of Safeway with a rise from 10.9 to 12.3 per cent.

It is also understood that Asda's like-for-like sales continue to outperform most in the industry. In the six months to April, comparative sales rose 10.5 per cent. Since April the increase is 12 per cent. Asda has styled itself as the cheaper alternative to its rivals with high-profile campaigns on the price of books, bananas and non-prescription medicines.

As Asda shares rose 2.75p to 120.75p, Tony MacNeary, food retail analyst at NatWest Securities, said: "It is a stunning performance. I'm not sure where the growth is coming from but with figures like these they do not need a loyalty card."

Sainsbury's is due to launch its Reward loyalty scheme on Monday.

According to a leaked internal memo, the company will need to increase sales by 2-4 per cent to cover the costs of the card. Tesco's ClubCard required a sales uplift of around 2 per cent to pay for itself.

The Reward card will offer Sainsbury's customers a 1 per cent discount on goods, with one point earned for every pounds 1 spent above pounds 5. This compares with Tesco's minimum of pounds 10.