Grocery market upheaval including the continued rise of the discounters was today described as an industry “shockwave” by Asda boss Andy Clarke.
The retailer’s chief executive and president was speaking on the announcement of a 1.6% decline in third-quarter like-for-like sales, excluding petrol. He said the industry faced a “new reality”.
“Although we were the first to adapt, we need to do everything to remain ahead of our traditional competitors while removing reasons for customers to go to the small discount shops,” Clarke added. “That’s the strategy we are on and we need to keep accelerating it,” he said, adding Asda would not be “knee-jerked” into reacting to short-term tactics.
“Vouchers can win quarters, but strategies win decades,” Clarke stated. “I expect that we will see another tough quarter and I’m under no illusions that the battle continues to rage.”
He noted that although Asda’s performance in the third quarter was a step back from 0.6% like-for-like growth the previous quarter, the retail market as a whole had slowed significantly during the 13 weeks to the end of September.
Clarke added he was pleased with Asda’s performance in a distressed market. The supermarket group continued to close the price gap with discounters, he said, driving Everyday Low Prices through its relationship with its subsidiary International Procurement (IPL), which had delivered £190m savings to the group in five years.
Asda took early action to address the changes in the retail market a year ago, Clarke added. It had implemented a five-year strategy to redefine value retailing by focussing on delivering a “market-leading” value proposition, driving efficiency within the business, as well as leading online and delivering physical formats for the future.
Clarke said Asda had continued to deliver this strategy quickly, reporting a 19.6% growth in online shopping – the supermarket’s tenth consecutive month of above-market growth - and the launch of two large store format trials in Coventry and Grantham.
“A year ago we took clear action to address the changes in our market,” said Clarke. “That is a long term strategy that won’t be delivered overnight, but our early, decisive action has seen our business outperform our traditional competitors.”
Asda has begun to step away from the big four and outperform its traditional competitors.
Asda remained the only one of the traditional supermarkets to have grown market share, he said, up nine basis points to 17.3% in the period.
Clarke added that Asda had a clear understanding of the challenge it faced. “When I launched our strategy I said the market was beginning to polarise between the premium retailers and the discounters – and the traditional players would be squeezed.
“Asda has begun to step away from the big four and outperform its traditional competitors. We have more to do on the discounters – but we continue to close the gap on price and offer ten times the range across stores and online.”