Asda launches "radical action" as it invests £500m to fight price war

SUPERMARKET group Asda is to invest £500m in price cuts as the intense competition between retailers shows no sign of easing up.

The Walmart-owned group, which is headquartered in Leeds, is nearly halfway through its five-year commitment to invest £1bn over five years and this latest announcement is in addition to that sum.

It has also joined European Marketing Distribution, which brings manufacturers and retailers together to develop new markets within the group’s European network.

Last week TheBusinessDesk.com revealed it had bought two of its major meat suppliers, which have a combined turnover of £450m, as it sought to take greater control of its supply chain.

In October Asda launched Project Renewal, an 18-month programme designed to prioritise its core business of supermarkets.

Andy Clarke, chief executive of Asda, said the retailer “must take radical action to win back our customers”.

He added: “We expect that 2016 will be another year of intense pressure at a macroeconomic level in addition to sales remaining under strain from price deflation, a continued competitive background throughout the sector and radically changing customer shopping habits.”

Sales at Walmart-owned Asda have been particularly badly hit, and in December 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 also warned in the run-up to Christmas that “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.”