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Asda chief attacks rivals' voucher tactics

Criticism came as Asda reported its first full-year fall in sales for six years

Simon Neville
Friday 20 February 2015 02:25 GMT
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Asda has not performed well against the emergence of budget grocers
Asda has not performed well against the emergence of budget grocers

The Asda chief executive, Andy Clarke, made an unprecedented attack on his rivals yesterday, accusing them of flattering their sales figures by offering shoppers vast numbers of money-off vouchers.

His criticism of the tactic, which he called supermarket “quantitative easing”, came as Asda reported its first full-year fall in sales for six years.

Mr Clarke said sales, which declined by 2.6 per cent in the three months to 4 January, would have risen had it not been for the use of vouchers by what he described as “struggling” rivals. He said: “There was a significant amount of vouchering and promotional activity. I would say unsustainable, medium-term activity and you can only give away £10 notes for £9 for so long. There is no doubt that the amount of activity by struggling retailers has impacted the overall market.

“The £10 off £40 [vouchers] that flooded the market in the last quarter was more than we’ve seen for many years … [but] that short term activity is not the way to manage a business in the long term because at some point sanity takes over from vanity.”

Asda’s full year like-for-like sales dropped by 1 per cent, the first fall since 2008 and led to Mr Clarke warning that they could fall throughout 2015. He said: “Mike Coupe [the Sainsbury’s chief executive] came out in November and talked about the industry being in decline for up to two years… it is going to be an incredibly challenging market for 2015 and 2016. In overall terms, I’d suggest that Mike is not inaccurate.”

Asda has managed to fend off the rise of discounters Aldi and Lidl better than its “Big Four” competitors, Sainsbury’s, Tesco and Morrisons, but grocery deflation and an ongoing price war appears to be taking its toll.

Mr Clarke told the City that this year the company planned to open 17 new supermarkets and update several existing stores, at a cost of £600m. He said the focus for new stores would be in the South of England, where Asda is traditionally under-represented, and where the group believes the biggest gains can be made.

Some of the money will also be spent on a redesign of Asda’s branding, incorporating the golden sun used by its US parent company, Walmart.

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