Walmart’s problem child – ASDA claims progress, but sales continue to fall

ASDA has claimed they cut prices for helping to lure shoppers back, after several years in the slump. The third biggest grocer of the UK has had that a 2.8 per cent quarterly fall in sales at outlets open at least a year – the 11th decline in a row – has been proclaimed as “sequential improvement.”

They are right at one point. It is true that there was a real improvement on the 2.9 per cent fall in the previous quarter, and the 7.5 per cent slide reported in August last year, and on the 5.8 per cent tumble recorded in the three last months of 2016.

Actually, total sales rose 0.9 per cent, but operating income declined. ASDA’s parent company, US retail giant Walmart declined to give further details. Walmart said ASDA was “beginning to see improved customer traffic numbers and basket trends as we make strategic investments” in prices.

The boss Sean Clarke, who was dropped in here from Walmart’s Chinese operations last year to handle with ASDA’s problems, told that they have stopped the price war on rivals and focused on selected price cuts averaging 15 per cent on everyday favorites, as well as on improving service and availability.

Mr Clarke said ASDA was delivering more consistently for its customers: “Despite this progress, we are in no way complacent and there is still much for us to do.”

“Our colleagues continue to make improvements for our customers every day,” the boss of ASDA said in an official report.

Walmart chief executive Doug McMillon added: “We are navigating our way back to a position of strength in that highly competitive market.”

His statement has a solid foundation. ASDA has lagged its ‘big four’ rivals Tesco, Sainsbury’s and Morrisons in recent years as the UK grocery sector responds to the challenge of German discounters Aldi and Lidl, which have taken the model of “everyday low pricing” to its top. Critics have argued that Walmart has taken too much money from the chain, resulting in fall down store standards and disappointed staff.

ASDA remains the struggler among other grocery chains, the one that has suffered most from the depredations inflicted by Aldi and Lidl. This is not a big surprise – all big supermarkets are all quite similar. So, the choice of customers where to go is based mostly on the convenience factor.

Despite that, what is the main reason for going to ASDA? Why walk a little further to go there to do your weekly shop? That would be a price.

Sainsbury is for the middle class and has high “values”, Morrisons has its always fresh food. Tesco looks like the most working buddy in this company and does everything very well, and CEO David Lewis did himself no harm when he took on his old employer Unilever over the price of Marmite.

The German “couple” has also established a reputation for really high quality products – this is what ASDA has not always enjoyed. However, it has set its sights on becoming Britain’s biggest craft beer retailer and has also done a deal to add to the “gin renaissance” but is it enough?

Although recent industry data from Kantar Worldpanel revealed that ASDA recorded its first year-on-year sales growth since October 2014, with sales in the 12 weeks ending April 23 inching up 0.8 per cent, it will be a big challenge to catch up its ‘big four’ rivals.

Meanwhile, sales at Walmart’s US stores beat expectations in the first quarter and it recorded its fastest growth in online revenue in five years, as the retailer looks to challenge the dominance of Amazon in e-commerce.

Leave a Reply

Your email address will not be published. Required fields are marked *