Asda sales in the final three months of 2016 fell by 2.9 per cent, making it the only one of the so-called big four grocers to post negative same-store sales growth over the key Christmas trading period.
While some analysts pointed out the decline was slower than the 5.8 per cent slide in the third quarter, and the 7.5 per cent fall in the three months to June,Tom Berry from GlobalData described the Walmart subsidiary’s performance as “dismal”.
Asda CEO Sean Clarke admitted the company has “a lot to do”, and Berry says there is no hiding the fact that these results identify a major grocer in demise – in what is an increasingly competitive market.
“While Clarke has attempted to remain positive, identifying basic enhancements such as improved ranges and availability, little detail has been offered on how he plans to arrest the decline.”
Berry believes the grocer has yet to find its feet in the market since discounters Aldi and Lidl have undermined Asda’s reputation for low prices.
“In a year which has seen Morrisons strike a deal with Amazon to drastically increase its delivery capabilities, Sainsbury’s complete its purchase of Argos (Home Retail Group) and Tesco announce the surprise acquisition of food wholesaler Booker, speculation is on the rise as to whether Asda will follow suit and look to drive growth through acquisitions.
“While the rest of the big four have invested heavily in premium ranges and the instore experience, Asda has noticeably lagged behind despite the financial might of owner Walmart.”
Berry says that with food price inflation a major talking point for the industry in 2017, Asda’s ability to overturn its string of negative results will rely on Walmart using its global purchasing power to mitigate the impact of cost price rises.
“Adding to Asda’s woes is its lack of same day delivery options for online sales. With the added threat of Amazon Fresh growing its one-hour delivery coverage, Asda’s online offer is significantly behind its competitors.”