On first impressions, Asda boss Allan Leighton doesn’t seem to share much in common with former Tory Chancellor Norman Lamont. But today he was doing the rounds with the message that the struggling supermarket giant was starting to see “the green shoots of recovery”.

Also like Lamont, Leighton has set an all-encompassing target of controlling inflation, claiming that despite its year-on-year decline in sales, Asda is once more starting to carve out a position as the “gatekeeper” for lower prices.

It’s doing this, he claims, by refusing to put through inflation in a way its rivals aren’t matching.

“We are not putting cost price increases through like the rest, we are holding back.” Leighton said today. “We think it is an opening for us.”

Inflationary pressures

Asda’s executive chairman went further by telling The Grocer it was not for turning (to quote a figure familiar to Lamont) on inflation, despite its own income tracker revealing this week that inflation climbed to its highest level in 15 months, as shoppers come under the cosh once more on prices.

The likes of the BRC have warned of a new surge in inflation come the autumn, sparked by an avalanche of costs including the government’s £2bn “packaging tax”.

But Leighton says that if suppliers do come calling, they will get short shrift.

“We have to question when suppliers come in with floods of requests for price increases,” he said.

“We’re the gatekeeper for those prices and we are managing to do that. You can’t say you stand up for customers and then not do that because CPIs are coming through.”

As usual, anyone listening to Leighton in action cannot help but be impressed by his confidence and straight-talking – but one look at this week’s Kantar figures shows the reality of the uphill battle he is facing.

Asda’s market share fall

Asda’s market share fell to just 12.1% in the 12 weeks to May 18 – its lowest level since Kantar began tracking the data in 2011. Tesco’s climbed to 28%, and The Grocer revealed earlier this month it is targeting a return to the 30% share dominance it last enjoyed more than a decade ago.

Ged Futter, founder of the Retail Mind and a former senior Asda buyer, warned the supermarket would find it easier said than done to resist price hikes, when its market share was so weak.

“You have to go back 30 years or more for when Asda had such a low market share,” he said. 

“It’s all very well Allan Leighton saying they won’t cave in to CPI requests, but what it will find is that suppliers will just turn around and say, ‘OK then, see you later’. What’s going to happen to their availability figures then?

“With that sort of market share, Asda is not in a position to dictate to suppliers in the way it once could.”

Leighton knows only too well that Asda’s turnaround mission has barely begun, and despite the positive news on improved availability – which was a must given how bad it had become – it needs to do a lot more to turn things back in its favour.

Otherwise, sadly for Leighton, it won’t be green shoots but blue and white stripes that continue to be the order of the day.

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