Home Retail Asda sales hit by rival discount store chains

    Asda sales hit by rival discount store chains


    New market share figures show supermarket group Asda on the back foot as the UK food market polarises with discount chains Aldi and Lidl and upmarket grocer Waitrose sprinting ahead of the pack.

    Asda was the biggest loser from the so-called “two nations” effect unearthed by the Kantar Worldpanel data. It shows food retailers at either end of the value spectrum doing well but those in the middle are struggling as shoppers juggle their household budgets to save money. Last week Tesco said sales of its premium Finest range were up 10 per cent as shoppers opted for a cheaper treat than eating out.

    Asda’s market share dropped back from 16.7 per cent to 16.3 per cent in the 12 weeks to 13 June, putting it only a fraction ahead of Sainsbury’s on 16.2 per cent. This week the Walmart-owned grocer said its deputy chief executive, Simon King, had left the business after six months in the role.

    Kantar analyst Edward Garner said the “two nations” effect showed that “not everybody is the same” and it was possible for the market to “go in two different directions at the same time”. Analysts point to a twin track retail economy where households with mortgages are better off thanks to low interest rates but others are struggling as higher food and fuel prices erode their disposable income.

    The market share figures coincided with the publication of Asda’s monthly Income Tracker which showed families were £14 a week worse off in May than a year ago. The report said the average UK household had £165 for extras last month which was 8 percent lower than last year. Consumer price inflation is running at 4.5 per cent in May which is double the average pay rise.

    “The true cost of living is now beginning to take its toll,” said Asda chief executive Andy Clarke. “Inflation is rising at twice the rate of earnings, petrol prices are at a record high and utilities bills are only getting steeper – adding up to a £14 a week hole in people’s pockets.”

    The squeeze has been good news for Aldi and Lidl, which have been setting the pace for the “big four” Tesco, Asda, Sainsbury’s and Morrisons over the last three months, with sales growing at 18% compared with an average of nearly 5%. Waitrose saw the next highest growth with sales up nearly 9 per cent.

    Garner said consumers walking rather than driving to the supermarket could have hit Asda as most of its stores are large, out-of-town sites. Analysts also said the Leeds-based grocer’s “everyday low price” message was being “crowded out” as shoppers were confronted with up to 40 per cent of products on special offer in rival stores. Last month Asda said like-for-likes were flat in the first quarter.

    Asda is expected to pull away from Sainsbury’s in the coming months as it has begun revamping the Netto chain which it acquired from Dansk Supermarked last year, with all 147 stores to be refurbished by November. It has already converted 17 and a spokesman said sales had exceeded their expectations. “Once you take out new space form the Kantar numbers, you get a slightly different picture,” said the spokesman. “We’re confident that we’re making good progress.”

    Source : Guardian