Andy Clarke, the chief executive of Asda, yesterday vowed he would win the supermarket war even though the Walmart-owned grocer recorded its first significant slump in sales since the onslaught of the discounters began to undermine the big players.
The UK’s second-largest supermarket chain admitted that sales had fallen 1.6 per cent in the third quarter of this year as it finally succumbed to pressure from Aldi and Lidl. Previously, it had not suffered a serious decline in like-for-like sales since 2010.
But Mr Clarke hit out at the tactics adopted by his rivals to counter the march of the German duo, attacking Morrisons’ recent pledge to use money-off vouchers and its loyalty card scheme to price-match Aldi and Lidl. “We won’t be knee-jerked into reacting to short-term tactics,” said Mr Clarke. “Vouchers can win quarters, but strategies win decades.”
He added: “The last quarter has seen a shock wave go through our industry and others are starting to respond to the challenges they face. I expect that we will see another tough quarter and I’m under no illusions that the battle continues to rage.”
The third-quarter result is a body blow for Asda, which had so far proved the most resilient of the big four grocers, using its low-price ethos to keep shoppers loyal.
The figures come a day after Sainsbury’s revealed it had slipped into the red, while Morrisons continues to record plunging sales and the new Tesco chief, Dave Lewis, tries to rescue the UK’s largest grocer from a tailspin amid a scandal over a £263m shortfall in its profit forecasts.
Mr Clarke set out a plan last year to counter-punch the discount threat by slashing prices, revamping big stores and building its digital arm, and Asda said this was being delivered “with agility and pace”. Online sales rose by 19.6 per cent in the latest quarter and the retailer has grown market share to 17.3 per cent. It has also moved to reduce costs by cutting 1,360 jobs and retraining 700 managers.
“We have more to do on the discounters,” said Mr Clarke, “but we continue to close the gap on price and [we] offer 10 times the range across stores and online.
“A new reality is upon us and, although we were the first to adapt, we need to do everything to remain ahead of our traditional competitors, while removing reasons for customers to go to the small discount shops.
“A year ago we took clear action to tackle the changes in our market and implement a five-year strategy to redefine value retailing. That is a long-term strategy that won’t be delivered overnight. But our early, decisive action has seen our business outperform our traditional competitors”
Asda, along with Tesco, John Lewis, Argos and Currys, will be among the retailers trying to tempt “black Friday” bargain hunters in two weeks’ time. On the first Friday after Thanksgiving, it has become an American custom that retailers slash prices, notably on electrical goods, attracting swarms of customers.Reuse content