Asda Q1 2016 sales continue downward trajectory

Date : 19 May 2016
Asda has reported that sales and traffic have both fallen on last year.

Fierce competition

Asda's like-for-like sales have fallen by 5.7% for the 13 weeks 30th March. This follows a 5.8% decline in Q4 of 2015 and an overall like-for-like decline of -4.7% in 2015.

Brett Briggs, chief financial officer at Walmart, has pointed to a continued struggle within the UK, "due primarily to fierce competition." He added that improvements to price and availability had not been sufficient to "overcome traffic and food volume declines in our large format stores."

Falling traffic and continued focus on Project Renewal

Q1 has seen Asda suffer a 5% fall in the number of visitors to its stores, underlining the challenge it faces to not only grow the spend of its existing shoppers, but also to win back lapsed customers.

Focus will continue on Project Renewal, Asda's strategic update designed to strengthen the retailer's core business, which revolves around simplifying and strengthening the customer offer, reduce costs and drive sales. Asda states it is making good progress in delivering cost savings through its cost analytics program, which are in turn being invested back into the business.

Re-investing into the customer offer

Much of this re-investment focuses on reducing prices, with Asda committing to an additional £500m price investment earlier in 2016 as part of the launch of "Pocket More". Improvements to private label are also underway, as is a regeneration plan of Asda's large store estate.

Asda's previously announced partnership with Decathlon is scheduled to go live in the Manchester Eastlands store in June. Further repurposing of space is anticipated through space swaps, which will see categories re-located to better reflect customer shopping preferences. Fresh in particular will be shifted to the front of the store and will benefit from a significant overhaul to lower shelving and enhance its shoppability.

Asda will also hope that its new partnership with James Martin resonates with its target market and improves the retailer's low-price, foodie credentials.

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