The supermarket saw sales at stores open for more than a year decline by 0.1 per cent year on year in the quarter to 3 January, down from 0.3 per cent growth in the previous quarter and a 0.1 per cent rise a year ago. That despite Asda insisting just last month that it had seen record online sales and footfall over the Christmas period.
Speaking at an event in London to announce the results today (20 February), Asda CEO Andy Clarke blamed a “tough year” for the weaker performance. However, he said the firm was “playing the long game” and that a shift in marketing message to focus on price and quality had “made a difference” to customers’ view of Asda, improving perceptions.
He told Marketing Week that focus would continue this year but that ads would become “more creative”.
“We are trying to get a bit of our personality through advertising, whether it’s our quality or price messaging. We’ll see lots more creative advertising this year,” he added.
Historically, Asda ads have focused on price and product. However, there are now signs of change following the appointment of agency VCCP Blue.
Clarke added that 2013 was the first year Asda stopped reactionary vouchering, “baggage” as he described it”, to keep up with rivals, instead investing in permanent price drops. Asda claimed it now has the widest gap to Tesco and smallest gap to Aldi and Lidl in terms ever in terms of price, helped by its “Price Lock” campaign.
Meanwhile, Barry Williams, chief merchandising officer, said the Price Lock message has helped communicate the “permanency” of Asda’s pricing policy. He used the example of cucumbers, showing how a price drop to 50p in January last year led to a “fabulous” 75 per cent increase in volume sales to more than 50 million a year.
“Retailers are using vouchers to cover up price increases – what they are giving away with one hand they are taking back with the other. That’s not a game we are interested in playing with our customers’ hard earned money.
“Price Lock demonstrates to us that honest, transparent pricing really works. Our customers get it and our customers will reward us with trust and volume growth because. It’s given us a way to communicate the mechanics of everyday low pricing a lot more clearly to our customers,” he said.
Clarke said Asda is also adapting its business to limit the impact of new challenges, such as the rise of discounters and online. The supermarket is planning to trial three new “stores of the future” that will focus on improving the shopping experience in categories that customers think are important, including health and wellbeing, food and home.
Asda is also looking to extend its brand further into the convenience market, including trialling standalone petrol forecourts and a small high street store in Sheffield. The first Barclays branch will also open in store next week, while it is plotting further click-and-collect locations, including at universities, following the “better than expected” performance of its trial at London tube stations.
There will also be more in store events following on from the success of discount day Black Friday, which Clarke claimed gave Asda a boost in October compared to its rivals.
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