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Asda continues to focus on online and low prices in market of ‘unprecedented distress’

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Asda chief executive Andy Clarke has said the supermarket will continue its focus on online retailing and closing the price gap with discounters at a time of “unprecedented distress” in the grocery market.

Reporting a 1.6% fall in like-for-like sales for the third quarter, he said the company would continue its five year strategy, put in place a year ago, to redefine value retailing. That included a focus on online selling, which grew by 19.6% in the quarter.

“That is a long-term strategy that won’t be delivered overnight, but our early, decisive action has seen our business outperform our traditional competitors in a market that is in unprecedented distress,” said Clarke.

“We have a clear understanding of the challenge we face as a business. When I launched our strategy a year ago I said that the market was beginning to polarise between the premium retailers and the discounters – and the traditional players would be squeezed. Asda has begun to step away from the ‘Big Four’ and outperform its traditional competitors. We have more to do on the discounters – but we continue to close the gap on price and offer ten times the range across stores and online.”

Clarke said that despite falling sales – growth of -1.6% in the 13 weeks to September 30 followed second-quarter growth of 0.6% – he was pleased that Asda was still outperforming its competitors and continued to grow market share.

While he recognised more offers and “gimmicks” had been launched in the last quarter across the industry, Clarke said its strategy remained firm.

“The last quarter has seen a shockwave go through our industry and others are starting to respond to the challenges they face,” he said. “I expect that we will see another tough quarter and I’m under no illusions that the battle continues to rage.

“A new reality is upon us and although we were the first to adapt, we need to do everything to remain ahead of our traditional competitors whilst removing reasons for customers to go to the small discount shops. That’s the strategy we are on and we need to keep accelerating it.

“We won’t be knee jerked into reacting to short term tactics. Vouchers can win quarters, but strategies win decades.”

The supermarket also said it was developing new large store formats, and that sourcing through its International Procurement Limited subsidiary, which develops direct relationships with producers had saved £190m since Asda acquired the company in 2009.

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