Asda needs more than low price position following falling sales

Asda has reported another quarter of falling sales as customers continue to feel the pinch and its Every Day Low Prices strategy fails to turnaround its slow growth.

The Wal-Mart owned chain reported a 0.4% fall in like for like sales in second quarter.

According to the latest figures from Kantar Worldpanel, Asda also dropped its market share 1.7% to 16.9% in the past 12 weeks.

Wal-Mart International president and chief executive Doug McMillon defended the poor growth saying that Asda “continues to make good progress towards its strategic goals”.

The results follow a 0.3% dip in the first quarter of the year when then-CEO Andy Bond revealed that the chain would continue to refocus its strategy on Every Day Low Prices and reducing promotions.

Ed Garner, retail analyst at Kantar Worldpanel says that while Asda is still suffering from being blown off course by too many promotions, the real issue is its position in the market.

“The market has changed considerably and now consumers feel there is more to life than low prices,” he says.

Asda launched its Price Guarantee in May and Wal-Mart International CMO Rick Bendel told Marketing Week that the initiative would turnaround Asda’s slowing growth.

Industry observers say that it will take time to shift perceptions, particularly as Asda’s low price image is so strong.

Garner adds: “Consumers think it’s either low price or quality. The Price Guarantee makes sense as a marketing strategy but it reinforces that Asda equals cheap, not quality and perception is reality.”

The chain is currently slashing the prices of many core items such as milk, bread and eggs to ease consumer’s shopping bills in the face of rising commodities costs. Mike Watkins, senior manager, Retailer Services at Nielsen says that although the tactics seem to be increase basket spend, it’s too soon to asses the impact of the price campaign.

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