Yesterday Asda, a subsidiary of the US behemoth Walmart, announced that like-for-like sales had slipped 4.5% in the thirteen weeks to September 30. That’s little better than the 4.7% dip in its previous quarter, its worst in 50 years.
All of its major rivals are struggling but it seems that none has been hit quite so hard by the rise of Aldi and Lidl, which Kantar says grew by 16.5% and 19% respectively in the period.
‘There’s no doubt this represents another challenging quarter,’ said Asda chief exec Andy Clarke. ‘Sales volumes remain under pressure from price deflation and the intensely competitive background remains throughout the food sector.’
It’s perhaps no surprise that Asda has fallen prey to the discounters. It has always been at the budget end of the market, contrasting its prices with Tesco, Sainsbury’s and Morrisons.
There’s no doubt Clarke has one of the toughest jobs in retail this year, but he’s adamant he can make success out of dominating this no man’s land. ‘I’m confident that by reinforcing our offer we can further extend our price advantage over major competitors and close the gap against the limited assortment discounters (Aldi and Lidl) – not only on price, but across range, service and quality,’ he said.
Clarke’s attempts to ‘reinforce’ that offer began with a five-year plan to tackle the discounters head-on, which he launched in 2013. Last month he announced a new 18-month strategy, dubbed ‘Project Renewal’, in a bid to up Asda’s game.
In Clarke’s own words: ‘Last month I launched Project Renewal, an 18-month programme designed to work parts of my five year strategy harder to return us to long term, sustainable volume growth.’
The specifics include cutting its range by 10%, ‘investment in a refresh of 95 large stores and delivering proposition stores to continue innovating and taking learnings on what really works for customers.’