ASDA’S chief executive Andy Clarke is not expecting any Christmas joy from the supermarket’s sales figures, but nor should its traditional rivals.
“It’s going to be a tough December,” Mr Clarke told The Guardian. “I don’t think when the numbers are released in January you are going to see many [retail bosses] with a big smile of joy.”
The sector has been under pressure from the sustained growth of Aldi and Lidl while the big four have had to respond to consumers’ changing behaviour, with the weekly big shop being replaced by several smaller shopping trips, which has affected customers’ loyalty.
Sales at Walmart-owned Asda have been particularly badly hit, and last week its market share hit a nine-year low. It has seen sales fall in the last five quarters, with its second and third quarters of 2015 recording drops of 4.7% and 4.5% respectively.
Mr Clarke, who correctly predicted at the start of 2015 that “the discounters will grow and there will be winners and losers”, expects the difficult trading conditions to continue for supermarkets.
He said: “Next year is going to be a year of continued deflation and challenging [sales figures for the industry] … The customer is going to continue to have value from pricing investments placed by many retailers.”
The Leeds-based supermarket launched Project Renewal in October, an 18-month programme that will see it prioritise its core business of supermarkets and slow down its expansion plans for its click-and-collect service.
“We’re focused on delivering overall value for our customers with one clear eye on the medium term and the other on the long term,” Mr Clarke added.
“It’s very easy to buy short-term sales with promotional activity, but I believe that’s not the way to long-term sustainable success.”
That long-term success may be led by someone else, with the recent appointment of Sainsbury’s retail and operations director Roger Burnley part of an agreed succession plan for the top job at Asda.
Mr Burnley will join in the autumn but Mr Clarke is in no hurry, first wanting to see out the remaining three years of his five-year plan.
He said: “Roger knows he’s not ready to take the helm straight away but I’m going to work with him to get him into a position to take over. I want to see this plan through.”
