Asda this week reaffirmed its commitment to Every Day Low Pricing despite reporting a slowdown in like-for-like sales growth.
Asda reported second-quarter like-for-like sales growth of 0.7% for the 12 weeks to 5 July 2013, down from 1.3% growth in the first quarter. But volumes were up, as Asda kept a lid on inflation, said CFO Richard Mayfield.
“Consistent investment in price and the reduction of food inflation has diluted to some extent our top-line growth, but we’ve seen volumes respond, with growth ahead of the market.
“We’ve also taken time to decide where and in what format we want to open new space compared with some of our competitors,” he added.
CEO Andy Clarke reiterated its £100m annual “investment in price” through EDLP measures was delivering volume growth and claimed this would prove more sustainable in the long run rather than going for top-line sales growth funded by ever-increasing vouchering.
“We think our approach is the best in terms of delivering sustainable growth. The fact we are seeing volume growth shows our strategy is working,” said Clarke.
Exclusive research for The Grocer shows while all ‘big five’ retailers increased the number of promotions they offered in the four weeks to 11 August 2013, compared with the same period a year ago Asda’s increase was significantly lower than its competitors. It increased promotions by less than 1%, while Sainsbury’s upped them by 25.12%, Tesco 19.95%, Morrisons 16.06% and Waitrose 8.16%.
Asda’s executive director of property and multichannel Karen Hubbard - responsible for delivery of its ‘clicks and bricks’ strategy - conceded the second factor affecting its top-line sales growth was a relatively lower investment in new stores.
“Whilst we’re the second-biggest grocery retailer in the UK, over 47% of the UK public say they don’t have access to a physical Asda store,” she said.
Asda would “aggressively” open new stores over the next two years - especially those between 5,000 sq ft and 25,000 sq ft - while also strengthening its multichannel offering to combat this, she promised.
Hubbard also predicted that within two years its Click & Collect business would be as important in size as its online delivery business.
Asda is poised to announce the results of external research carried out by management consultants McKinsey, which it appointed in February.
McKinsey’s research had already affirmed certain recent strategic decisions, Clarke said, including Asda’s partnership with Disney.