Country’s second largest supermarket reports slowing quarterly sales but says profit margins had improved
Asda said its no frills promise of “every day low prices” was helping it win over hard up customers confused by the blizzard of petrol promotions and money off deals crowding the supermarket aisles.
The number of deals being offered by the big chains has mushroomed this year as household budgets continue to come under pressure, forcing stores to fight harder for business. But Asda finance director Rob McWilliam said rivals were using “gimmicks to disguise a weak price position” with the strings attached to some offers forcing shoppers to play “basket bingo” to make savings.
McWilliam said it continued to see evidence of families sticking to strict budgets: it introduced £5 notes to its ATMs earlier this year and now one in five withdrawals takes advantage of the smaller denomination. In other evidence of shrewd housekeeping Asda said 600,000 shoppers each week had logged on to its website to use the Asda price guarantee – which promises to refund the difference if the shop is not 10% cheaper than at a rival store – in the second quarter compared with about 500,000 in the previous period.
The update came as the country’s second largest supermarket reported slowing quarterly sales but said profit margins had improved. Like-for-like sales increased 0.7% in the three months to June 30 which compared with 2.2% in the previous period. Kantar Retail analyst Bryan Roberts said the figures were “respectable”: “It’s a creditable result in what is a horrible market. Asda is giving a lot less away than other retailers and its pricing has a transparency that a lot of shoppers appreciate.”
When Andy Clarke took over as chief executive in 2010 he said the quality of its food was not good enough and with a nod to progress made in the last two years yesterday’s briefing was held at Leiths School of Food and Wine in London which is working with the retailer on a range of products. Clarke said £113m had been ploughed into reformulating its food ranges and it was receiving positive feedback from customers about the changes being made: “We’re redefining what real value means and showing that price and quality aren’t mutually exclusive.”
Leiths’ Nick Timothy admitted that when the tie-up with the cookery school founded by Prue Leith was announced last year the two had not seemed natural bedfellows but insisted the first wave of products, which includes a range of premium ready meals and enters stores next month, had not been “rubberstamped”: “Anything with our joint names on it is something we are happy with and proud of.”