Asda struggles to maintain market share

Asda has reported a slower than expected growth in fourth quarter sales, with like-for-like sales gaining only 0.1%, whereas the full-year sales grew by 1%. The supermarket chain reported a slow paced sales growth despite a bumper Christmas period owing to its online business. Asda reported that its total online sales increased 18.8% in fourth quarter as compared to last year but the grocer still faces challenge from rival Tesco, which is on a revival mode. The true picture has now emerged with the UK’s second-largest grocer struggling to maintain market share amidst a weakening economy and the prospect of rising inflation which is squeezing household incomes, prompting shoppers to turn to discounters Aldi and Lidl.

Announcing its quarterly results, Asda said that it will expand the delivery capability of its George.com clothing retailer to 24 countries, including Spain, France and Denmark. The company will also open more franchise stores in the Middle East, making the brand available in 35 countries.

The slight growth of 0.1% in the 14-week fourth quarter ended January 5 compares with 0.3% growth in the previous fiscal quarter. Asda’s market share slipped to 16.7% in the 12 weeks to February 2 from 17.1% a year earlier.

Hailing the fourth quarter results Asda’s CEO Andy Clarke said, “E-commerce continues to grow in the UK and our customers are using online and mobile for more of their purchases. This was our strongest online Christmas season, backed with excellent merchandise availability and service levels. As part of our investment in global eCommerce, we invested more in the UK, offering more convenient ways to shop through mobile apps and the expansion of Click and Collect for both grocery and general merchandise. More than half of our online general merchandise customer base now regularly shop Asda this way. “