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ASDA expected to report sales slump

ASDA 725 x 500

ASDA boss Andy Clarke is expected to come under more pressure this week when the Walmart-owned supermarket posts another heavy slump in sales while its “Big Four” rivals show signs of recovery.

At the start of the year Mr Clarke committed to spending another £500m on price cuts to win customers back from the discounters Aldi and Lidl. But there are few signs yet that shoppers are returning, according to analysts.

Mr Clarke has maintained that Asda’s strategy of “every day low prices” is the way forward to profitable growth, rather than coupons or money-off vouchers which he has deemed as “gimmicks”.

However, Asda’s rivals have now adopted the same approach by slashing their prices at the same time as investing in heavily marketed campaigns, which has lured more shoppers through their doors instead.

“Asda’s over-reliance on price shows that the Big Four need to give shoppers more reasons to visit to elevate themselves above the discounters”, said analysts at Verdict.

Asda’s shrinking market share, which has now fallen to 16pc, has prompted analysts to suggest the supermarket needs to do something radical in order to kick-start sales growth.

In February, Mr Clarke faced difficult questions when Asda posted its biggest ever quarterly fall in sales, despite his claim that the previous quarter’s weak performance was the “nadir”.

Figures from industry experts at Kantar recorded a 5.1pc slump in Asda’s total sales, however its previous records have flattered the scale of the slump at the supermarket.

Last month Tesco posted its first quarter of UK sales growth in three years while Morrisons chalked up its second straight quarter of rising sales. Sainsbury’s, which is in the process of spending £1.4bn on its takeover of Argos, also revealed its first quarterly sales growth in more than two years.

Meanwhile, the discounters Aldi and Lidl continue to add new stores which is rapidly increasing their grip on the market.

It is widely expected that Mr Clarke, who is the UK’s longest-serving supermarket chief executive, will step down next year and be succeeded by Roger Burnley who is currently on gardening leave from Sainsbury’s where he ran the supermarket’s shop estate and logistics.

Source : The Telegraph

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16 May 2016

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