The supermarket says sales from stores open for a year or more grew 0.3 per cent in the 13 weeks to 4 October, its third quarter. Like for like sales had grown 0.7 per cent in its second quarter and 1.3 per cent in the first.
Asda’s share of the supermarket sector dropped 0.4 points to 17.2 per cent, the Wal-Mart owned chain adds.
Asda CEO Andy Clarke said during an event to announce the results that Asda’s investment in low prices impacted growth, but it will have long-term benefits in boosting customer loyalty. The supermarket is planning to increase its investment in pricing to £1bn over the next five years, up from a planned £600m investment.
It will also invest £250m in “quality, style and design” over the next five years as it attempts to cement its position as the “leading value grocery retailer”, Clarke added.
Up to now, Asda’s advertising has reflected its big emphasis on pricing, with its “Everyday low price guarantee” forming the bedrock of campaigns. However, speaking to Marketing Week at the same event, CMO Stephen Smith said the supermarket now sees an opportunity to connect with its customers with a new quality message.
“We need to better showcase our value equation, highlighting not just price but also the quality of our products,” he said.
The move comes after Asda switched its ad account from incumbent Saatchi and Saatchi to VCCP Blue earlier this year. Smith said he was so impressed with the firm’s pitch that he got them working on all areas of its marketing, including branding and in-store design, within six weeks of winning the account.
That can already be seen in its Christmas advertising campaign, Smith added, which alongside the price message will also include ads focused on its award-winning wines, bakery and dessert products. He said Asda would also integrate its value equation into the marketing message going forward, with plans to highlight quality in “cheeky” ways in the first quarter of 2014.
The shift in focus comes after Asda undertook a “massive” strategic review to help it understand the market and shopper activity. Smith said there is a “sizeable” proportion of shoppers that don’t have a primary grocery shop.
He wants to convert more of them to Asda shoppers but believes the way to do this is to ensure that the stories behind its products, including factors such as provenance, comes through. That includes a new strapline “You’re better off at Asda”, which debuted during the Christmas campaign.
Asda’s performance lags Sainsbury’s, which yesterday (13 November) announced a 1.4 per cent increase in first-half sales, but beats Tesco, which posted flat sales for its last quarter and Morrrisons, which reported another decline last week.