Asda has joined its rivals, Morrisons and Tesco, by revealing a fall in sales, in the latest sign that the traditional Big Four supermarkets are getting squeezed by the discounters Aldi and Lidl.
The chief executive, Andy Clarke, said that sales fell 0.1 per cent in the 12 weeks to 3 January, although full-year sales were up 0.5 per cent on a like-for-like basis.
Last year he unveiled a five-year plan to slow the shift to discounters and woo customers back by investing in new stores, especially in the South-east, opening convenience stores and taking a hit on profits by keeping prices lower.
He said: "We have a five-year plan, which will focus on price and quality, and are spending £180m in strengthening our offer. We have the widest [price] gap with Tesco we've ever had and are closer to Aldi [on price] than ever."
He conceded there has been a fundamental shift in customer attitudes and shoppers are still feeling the pinch.
"There's little doubt that the UK retail market is undergoing significant and permanent structural change. Though the economy is showing signs of recovery, it is still susceptible to shocks and the benefit is not yet being felt across the country."
In particular, he warned that shoppers outside London and the South-east were struggling hardest, with disposable incomes remaining stubbornly low.
He said: "I've made this point to the Government and they are listening more."