Asda today cited challenging market conditions as it posted a 1.3% fourth quarter fall in like-for-like retail sales.
Asda chief executive and president Roger Burnley said it had invested in price and in value for money, while enabling shoppers to take delivery of their online shopping faster. The retailer said that sales of food were more stable than those of clothing at a time when customers continued to feel “cautious”.
He said: “Our home shopping operation continued to deliver double-digit growth in the fourth quarter – up 10.3% YoY – and we continue to innovate in this area. During the quarter we rolled out same day delivery to 284 stores and trialled a ‘one hour click and collect’ service in two shops. Following positive customer feedback, this service is being extended across the chain from today – helping our customers save even more time in their busy lives.”
Asda has also focused on its stores, upgrading seven and introducing trials with partners including Sushi Daily and Claire’s Accessories. “This,” said Burnley, “is an approach that we will continue to thoughtfully grow in 2020 as we deliver our partnerships strategy.”
Asda is working in a climate where its customers’ disposable income is falling, says Burnley. “We know that our customers mind sets during the quarter were cautious and whilst customers were enthusiastic for Christmas, they were more mindful in their spending – with many choosing to pare back gift lists and focus presents on kids rather than adults and extended family,” he said. “Our monthly Income Tracker showed that whilst disposable income remained stable at around £217 a week during fourth quarter, previously seen trends of growth are starting to slow and consumers remain highly budget conscious.”
The supermarket, which is rated Top50 in RXUK Top500 research, also pointed to sustainability work, from recyclable packaging for its steak range to a partnership with the Fareshare and the Trussell Trust.
“As ever,” said Burnley, “I am hugely grateful to our colleagues for their efforts for our customers this quarter and delighted that we have again been able to recognise hard work and will be paying a bonus to all our eligible colleagues later this month. We’re ambitious to deliver even more for customers in 2020 and have entered the year with an even sharper focus on driving forward our strategy, which is anchored in saving our customers time as well as money.”
Thomas Brereton, retail analyst at GlobalData, said the figures showed Asda facing the same Brexit-related “challenging market conditions” as other grocers at the end of 2019, although its sales seemed to have fallen faster than some of its competitors.
“For Asda, the problem remains that it needs a faster overhaul of its non-food offer. Its respectable food performance (which picked up numerous accolades over the quarter) will be bolstered in 2020 by recent partnership activity with pastry virtuoso Greggs (a five store concession trial) and the gradual introduction of the new one hour Express Click & Collect. But the decline in supermarket non-food sales – brought on by the combination of falling volumes in non-food and the impressive performance of non-food specialists such as Amazon – is something that Asda has been slow to adapt to in comparison to its primary rivals. Asda must consider reducing in-store space dedicated to non-food – particularly as it looks to expand aforementioned concession partnerships.”
Image courtesy of Asda