Tuesday 24 October 2017

Asda is hardest hit as UK's big four lose ground to Aldi and Lidl

Asda has been overtaken by supermarket rival Sainsbury’s
Asda has been overtaken by supermarket rival Sainsbury’s

Sam Chambers

All four of the UK's largest supermarkets saw sales decline over the last 12 weeks as the expansion of discounters Aldi and Lidl continued to rumble through the industry.

Wal-Mart Stores' Asda was the hardest hit, with sales falling 2.7pc through July 19, researcher Kantar Worldpanel said in its monthly report yesterday.

Revenue at Sainsbury's fell just 0.3pc, meaning the London-based company leapfrogged Asda to become the UK's second-largest grocer. Market leader Tesco's sales dropped 0.6pc.

Aldi and Lidl continue to gain traction in the UK amid increasing acceptance by British shoppers. Their sales increased by around 16.6pc and 11.3pc, respectively, in the 12-week period, Kantar Worldpanel said.

The flight toward the discounters has led to more than a year of falling grocery prices as bigger supermarkets have fought to retain customers.

Aldi is attracting new customers through investment in the depth and quality of its product range, Jonathan Neale, Aldi's joint managing director of buying, said by email. "Savvy consumers are shopping with us because they want quality products without having to pay expensive prices," he said.

Asda's market share now stands at 16.4pc, compared to 16.5pc for Sainsbury's.

All of Britain's so-called "big four" grocers - market leader Tesco, Sainsbury's, Asda and No. 4 player Morrisons - have cut prices in an attempt to stem the loss of shoppers to the fast-growing discounters.

The industry price war has hurt the big four's sales on a value basis, as has record commodity-led food deflation.

Analysts reckon Asda is particularly suffering because it has reduced prices without getting the boost to volume it was looking for, reflecting a difficulty in attracting more upmarket customers.

In May the firm reported its worst quarterly sales fall in more than five years, but chief executive Andy Clarke insisted its long-term strategy was the right one.

Analysts say the pressure is now mounting on Mr Clarke, the longest-serving boss of a big UK supermarket after management change at all of Asda's major rivals over the last year, with the presentation of the firm's second quarter results on August 18 seen as a possible crunch point.

Aldi and Lidl lifted their market shares to a record 5.6pc and 4pc, respectively. Overall, grocery sales increased by 0.8pc over the 12 weeks compared to a year ago, while grocery deflation was 1.6pc. (Bloomberg)

Irish Independent

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