Asda slows the decline as brand perceptions start to turn around
Asda slowed its rate of decline in its first half but still has a lot of work to do if it wants to make up for market share losses.
Asda is slowing the decline after a number of quarters of big drops in its sales, but the supermarket still has some way to go to make up market share losses.
For its first quarter ended 31 March, the UK’s third biggest supermarket saw its sales fall 2.8%, which compares to a decline of 2.9% in the previous quarter. Net sales, meanwhile, edged up by 0.9%.
In recent years, Asda has suffered as its price-orientated branding was eroded as the discounters Aldi and Lidl moved onto its territory by offering cheaper everyday items with a message on quality as well. The likes of Tesco and Morrisons are also making deep price cuts.
Despite another sales fall, Asda’s CEO Sean Clarke says the results mark a “third consecutive quarter of improvement” and are proof Asda is starting to turn things around.
“We’re delivering more consistently for our customers, particularly in fresh food, service and availability – both in stores and online,” he claims. “But despite this progress we are in no way complacent and there is still much for us to do.”
According to YouGov BrandIndex, the Asda brand is also showing signs of recovery. Over the last 26 weeks, its index score, which comprises of consumer perceptions including impression, quality, value, reputation and satisfaction, has risen 1.3 points. This places it ninth on a list of the UK’s 26 biggest grocers.
Its buzz score, which is a balance of the positive and negative things people have heard about a brand, is also up. Over the same period, it has risen by four points to 4.8; the fastest rate of growth out of the 26 grocers.
Asda will also be encouraged by the most recent Kantar Worldpanel numbers. For the 12 weeks ending 23 April 2017, Asda increased year-on-year sales for the first time since October 2014, although its overall market share fell by 0.4 percentage points to 15.6%.
Retail Remedy’s Phil Dorrell says Asda must now ensure its premium range matches its everyday items.
He concludes: “Recent visits to Asda suggest that availability is making progress but it is only as good as the range. Chasing costs for too long has meant the quality has become diluted.
“Asda must not forget aspirational shopping in their race to meet the needs of their demographic. We are positive that change will happen at Asda but the erosion of quality through cost reduction and price engineering takes some reversing out of.”
