Asda boss Andy Clarke said he expects the “incredibly challenging” market to continue to decline for the big four for up to two more years.
The Leeds-headquartered grocer today reported a 3.9% drop in like-for-like sales, while its market share fell to 16.9%, from 17.1% in the last quarter. Discounters Aldi and Lidl are continuing to eat into the big four’s market share while deflation is battering sales.
Speaking to media in London, Clarke admitted: “The market will see a big significant challenge for months to come. Mike (Coupe, Sainsbury’s CEO) talked about up to 24 months of market decline and I’m not seeing anything which would reflect anything different to that.”
He added: “I can’t remember a time when the industry has seen such a dramatic change in market structure.”
Clarke acknowledged that a 3.9% slip was a “challenging” number, but said he was confident in Asda’s long-term strategy. “There are short-term positions being taken by some retailers that aren’t sustainable in the long-term,” he said.
Large store format challenges
The Asda boss admitted that the large store format remains the company’s biggest challenge. But he said a new format being trialled in Grantham, Lincolnshire, was performing strongly. Grantham’s new-look Asda features an extra 8% of floor space dedicated to fresh food, health and wellbeing.
“We will continue to invest in that large store format to reinvent (the format) for the future,” he said.
Clarke said Asda remained on course to have 1,000 click-and-collect stores over the next five years, up from 611 at present.
Looking ahead, Clarke said it is “still an incredibly challenging market, but we made tough choices and we made them first”.
A restructure by Asda last year saw 1,360 jobs cut. Tesco, Sainsbury’s and Morrisons have all followed suit since.
Pressed on whether there will be more redundancies, Clarke said: “We made some tough choices last year, but it would be naïve of me to say ‘never say never.”
Analyst Clive Black of Shore Capital said the company is “clearly disappointed with its performance and will be seeking to refine its position to be more competitive”. But he added: “Whilst times are tough, forward thinking suggests that Asda and its superstore peers in the UK may be over the worst.”