Asda sets sights on discounters

Asda, which describes itself as the UK’s number two supermarket chain, reported a 1.6% step back in like-for-like sales (excluding petrol) in the 13 weeks to September 30.

Speaking at a briefing in London, the grocer’s ceo and president Andy Clarke said although no chief executive wants to report a negative comparison, he was pleased that “in a distressed market for all major retailers, Asda is outperforming its traditional competitors and gaining market share”. Whilst Asda’s performance in the third quarter was a step back from a 0.6% like-for-like growth in the second quarter of the year, it was noted that the retail market as a whole has slowed significantly in the third quarter.

Andy Clarke said that Asda took “early action” to address the changes within the retail market 12 months ago by implementing a five-year strategy to ‘redefine value retailing’ that focuses on delivering a market-leading value proposition, driving efficiency within the business operation, as well as leading online and delivering physical formats for the future.

He said that Asda had continued to deliver this strategy “with agility and pace” – reporting a 19.6% growth in online shopping, the supermarket’s 10th consecutive month of above market growth, and the launch of two ‘format’ large store trials in Coventry and Grantham.

Andy Clarke noted: “A year ago we took clear action. 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 ten times the range across stores and online.”

In a reference to the increase in “offers and gimmicks” launched by the supermarket sector in the last quarter, Andy Clarke concluded: “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.”