UK supermarket Asda’s same-store sales slumped further than expected in its fourth quarter, confirming its position as the worst performing of the Big Four grocery retailers over the festive quarter in a market of persistent price-based competition.

This sixth consecutive fall raises the question of whether Asda’s long-term strategy to redefine value in grocery shopping is working.

Asda’s core food positioning around everyday low pricing is still, to some extent, legitimate. Its promise to beat competitor prices by up to 10 per cent rather than just price match like its three main rivals is by far the most convincing approach, and it has continued to introduce pricing initiatives. Now it has introduced its “Pocket More” price-beating promotion on a further 1600 lines, following the launch of a more fundamental approach in October when it committed an extra £500 million toward renewal in addition to £1 billion already promised as part of a five-year plan.

However, Asda’s now prolonged story of sluggish sales shows it has not done enough to broaden its appeal beyond price. Reflecting its predicament, it has just asked suppliers to contribute cash to help cover promotional costs.

Away from price, Asda has a relatively weak reputation for quality, with its more upmarket Extra Special label needing to include more products as well as lacking marketing. While its more in-store experience sits well with traditional shoppers, the company needs to also improve its staffing levels. It also needs to offer more reasons for customers to visit if it is to claw back ground from the discounters (Tesco has been leading by example on this front with good effect).

Asda has announced some positive steps for this year, including the modernisation of 95 of its large stores to improve the shopping experience, but mainly around layout and merchandising. It also plans to further simplify its head-office structure to improve efficiency, and it has joined the EMD European supermarket alliance, which will give it added buying power and allow it to compete more strongly on price.

If it is to improve its outlook, however, Asda needs to evolve its mainstay food positioning. Indeed, its George fashion and home label, which has been performing strongly, has exactly the type of balanced consideration of price and quality it needs.

• George Scott is senior analyst at Verdict Retail.