Asda has fallen into negative like-for-like territory, reporting a 1.6% fall in its third quarter, as the trading environment took a toll.
The 1.6% decline in the 13 weeks to September 30 contrasted with a 0.6% uplift in the second quarter. Previously Asda had been the only one of the big four grocers to have been in growth.
Asda chief executive Andy Clarke said that “vouchers can win quarters, but strategies win decades” but admitted the grocer had more to do in the fight against the discounters.
“Vouchers can win quarters, but strategies win decades”
Andy Clarke, Asda
Clarke said that although no chief executive wants to report a negative comp, he was pleased that in a distressed market for all big grocers Asda is outperforming its traditional competitors and gaining market share.
Asda said its market share has risen 9bps to 17.3%.
Clarke said that Asda took early action to address changes in the retail market a year ago, implementing a five-year strategy to ‘redefine value retailing’ – focusing on driving efficiency, leading online and delivering physical formats for the future.
Asda has reported 19.6% growth in online shopping, and launched two large-format trials in Coventry and Grantham.
Asda also continues to drive efficiency through its Everyday Low Pricing policy and sourcing relationships with International Procurement (IPL).
IPL is wholly owned by Asda and sources products. Since Asda bought IPL in 2009, the business has delivered £190m of savings.
Clarke said: “A year ago we took clear action to address 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.
“We have a clear understanding of the challenge we face as a business. When I launched our strategy a year ago I said that the market was beginning to polarise between the premium retailers and the discounters – and the traditional players would be squeezed.
“Asda has begun to step away from the big four and outperform its traditional competitors. We have more to do on the discounters – but we continue to close the gap on price and offer 10 times the range across stores and online.”
Clarke said Asda had more to do to reaffirm its Everyday Low Price strategy. He said: “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.
“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 whilst removing reasons for customers to go to the small discount shops. That’s the strategy we are on and we need to keep accelerating it.
“We won’t be knee jerked into reacting to short-term tactics. Vouchers can win quarters, but strategies win decades.”
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Asda chief admits more to do in discounter battle as like-for-like sales slump