Asda boss Andy Clarke has vowed he will win the supermarket war, despite the Walmart-owned grocer recording its first significant slump in sales since the discounters began to punish the major players with cheaper prices.
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, Asda had not seen a serious fall in like-for-like sales since 2010.
But Clarke hit out at rivals’ ideas to counter the march of the German duo, attacking Morrisons’ recent pledge to use money-off vouchers through its loyalty card scheme to price-match Aldi and Lidl. “We won’t be knee-jerked into reacting to short-term tactics,” said Clarke. “Vouchers can win quarters, but strategies win decades.”
He added: “The last quarter has seen a shockwave 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 result is a body blow for Asda which had so far proved the most resilient player among the Big Four grocers — the other three being Tesco, Sainsbury’s and Morrisons — and had used its low-price ethos to keep shoppers loyal to its brand.
The figures come a day after rival Sainsbury’s revealed it had slipped into the red as it struggled to battle the discounters and invested £150 million in slashing prices.
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Morrisons continues to record plunging sales, and new Tesco chief Dave Lewis is trying to rescue the UK’s largest grocer from a tailspin amid a scandal over a £263 million shortfall in its profit forecasts.
Clarke set out a plan last year aiming 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 19.6 per cent in the latest quarter and the retailer has been growing market share, which stands at 17.3 per cent. The supermarket chain has also moved to cut costs by laying off 1360 jobs and retraining 700 managers.
“We have more to do on the discounters,” said Clarke, “but we continue to close the gap on price and 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 in a market that is in unprecedented distress.”
Asda, along with rivals Tesco, John Lewis, Argos and Currys PC World, will be among the retailers attempting to lure Black Friday bargain hunters.
The US shopping tradition, which takes place on the first Friday after Thanksgiving, sees retailers slash prices, notably on electrical goods, attracting swarms of customers.Reuse content