Asda chief executive warns of losers from challenge of discounters

ASDA chief executive Andy Clarke is getting prepared for another tough year for the Big Four supermarkets as they continue to face concerted pressure from discount retailers.

He warned that “the discounters will grow and there will be winners and losers” as shoppers and retailers change their habits in response to the offer of Aldi and Lidl.

Mr Clarke, speaking to the BBC, said: “The level of profitability decline in some retailers over the course of 2014 – we’ve never seen it before.

“It suggests 2015 is going to be equally as challenging.”

Mr Clarke does not believe that the market disruption the discounters are causing is a new challenge.

“Kwik Save had a place in this market for a good period of time and it disappeared from the landscape,” he said.

“I’m not suggesting that’s going to be the case with the current discounters but they are a retail format that’s been in this country for a good period of time.

“They’re a very different shopping experience. They’ve got roughly 10% of the product range of a superstore.”

The most recent sales figures have shown the impact that Aldi and Lidl continue to have, with Bradford-headquartered Morrisons among the most under pressure.

Morrisons’ group marketing director Nick Collard has acknowledged the challenge the retailer faces, and said: “The number one driver of store choice used to be convenience – it’s absolutely now about price.

“We still have the same relative number of customers, they’re just shopping slightly less frequently and buying slightly less.”

Sales at Morrisons were down 3.2% for the 12 weeks to December 7, although its West Yorkshire rival, Asda, was the best perfoming of the traditional big four, losing 1.0% during the period.

The latest grocery share figures from Kantar Worldpanel show that despite falling prices, the grocery market has returned to marginal growth of 0.1%, after last period’s historic first ever recorded decline. This is attributed to shoppers putting slightly more in their baskets compared with the same time last year.

Aldi and Lidl have reached a record combined market share this period with 8.6% of the market, up 1.5 percentage points over the past year. Aldi recorded the fastest growing sales of any retailer at 22.3% and is followed closely behind by Lidl with 18.3% sales growth.

The big four now account for 73.5% of the market – Tesco’s has 29.1%, followed by Asda with 16.7%, Sainsbury’s with 16.5% and Morrisons with 11.2%.