The escalating supermarket price war is beginning to bite at Asda after the UK’s second largest supermarket revealed a 2.6% fall in like-for-like sales over the last three months of the 2014.
During what CEO Andy Clarke called today “one of the retail market’s most challenging and changeable periods in history”, Asda’s quarterly sales fall in the 12 weeks up to 4 January to drag the supermarket’s annual like-for-like sales growth back to -1%.
However, Clarke stressed that Asda was bucking the industry trend of reducing retail space and announced plans to open 17 new stores in 2015, including three supermarkets in London. The Walmart-owned supermarket will also remodel 62 existing stores “to reflect changing shopper habits”. These openings and refurbishments will cost Asda £600m, on top of its five year pledge to invest over £1bn in price.
”2014 saw an acceleration in the structural shift in the market and whilst we saw it brewing and put the right plan in place to address it – delivering solid wins for our business and keeping the ship steady in a turbulent market, the pace and scale of change has exceeded all expectations,” Clarke said.
“The first year of our plan was very much about building the foundations –a work out to limber us up for what is to come in 2015 – by leading the price agenda in a deflationary market. We have a clear plan for sustainable, profitable growth and creates a proposition that gives customers what they want.
“I’m pleased that we can announce our continued investment in the UK with £600m for new and improved stores in 2015. With such a powerful force like Walmart behind us that fully supports our strategy, we’re in a unique position in a difficult market - a position of great strength.”
During the year, Asda invested £300m in lowering prices (£100m more than its five year plan envisaged), opened 17 stores, unveiled its new superstore format at Grantham and opened 200 click and collect sites to bring the total to 600.
Asda will also open 36 new petrol stations in 2015, 150 more click and collect sites and pledged to work more closely with its International Procurement Limited subsidiary to simplify and increase efficiency in its supply chain.