Asda sales fall once again as it admits ‘fierce’ competition is fuelling its ongoing ‘struggle’

Struggling supermarket Asda has reported a 5.7% fall in like-for-like sales for the 13 weeks to 30 March, with its parent Walmart bemoaning the “fierce” nature of UK retail.

The 5.7% fall in the first quarter compares to a 3.9% fall for the same period the year before and marks three years of primarily declining scales for Asda.

The disappointing results will be embarrassing for Asda’s CEO Andy Clarke, who last August claimed it had reached its “nadir” after sales fell 4.5% for its third quarter. However, things have only intensified since, with sales down 5.8% in Asda’s fourth quarter.

Asda is no longer giving press briefings around its results to the UK press, with today’s announcement instead distributed through its parent Walmart.

Walmart’s CFO Brett Biggs said on an analyst call: “The UK continues to struggle, due primarily to fierce competition. Improvements in price and product availability throughout the quarter were not enough to overcome traffic and food volume declines in our large format stores.

Briggs said that Project Renewal, Asda’s turnaround strategy that is focused on lowerping prices, slimming down the number of products on its shelves – around a fifth of the 40,000 lines it currently has will be cut – and is refurbishing its supermarkets remains a focus.

“However, Project Renewal remains a focus with the aim to simplify and strengthen the customer offer, reduce costs and drive sales. The cost analytics programme, which is part of Project Renewal, made good progress and delivered savings we were able to invest back into the business.”

Last month, Asda announced an advertising partnership with celebrity chef James Martin as it aims to make its marketing more about food quality and shift away from its historic focus on low prices.

Sainsbury’s boss Mike Coupe recently claimed that the price gap between the big four was now “virtually nothing”, with Asda’s famous Everyday Low Prices (EDLP) focus losing credibility amid cuts from the big four and the continued rise of Aldi and Lidl.

Asda is hoping the Martin partnership and February’s appointment of Andy Murray, the founder of shopper marketing agency Saatchi & Saatchi X, as its new chief customer officer can reignite its brand. In April it also dumped VCCP as its ad agency replacing them with Saatchi and Saatchi.

The marketing changes come as brand perception fell at a “statistically significant” rate at Asda over the last 12 months. According to YouGov BrandIndex, Asda’s reputation has fallen 2.2 points to a score of 0.5. This puts it 11th on a list of 26 of the UK’s biggest supermarket brands.

Its quality score, a balance of consumers’ perception of good and bad quality, has also fallen at a statistically significant rate dropping 2 points to a score of 8.6 – this puts it behind all of its big four rivals as well as Aldi, Lidl, Ocado M&S, Waitrose and the Co-operative.

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