Asda, Britain’s third largest supermarket chain, is finally showing signs of sales growth, after 11 quarters in succession of falling like-for-like (LFL) sales.
The chain, owned by US giant Wal-Mart Stores Inc (NYSE:WMT), saw LFL sales rise 1.8% from a year earlier in the three months to the end of July.
That was a big improvement on the previous quarter’s 2.8% decline.
The turnaround was achieved, however, against very softy comparatives; in the same period of 2017, LFL sales had fallen 7.5% from the year before.
Furthermore, the performance was flattered by the return of shop price inflation.
The chain has been hit hardest of the big four supermarket groups in the UK by the rise of hard discounters, such as Aldi and Lidl.
New boss Sean Clarke has introduced a “Farm Stores” low-price own brand in an attempt to combat the appeal of the low prices offered by the hard discounters.
It remains to be seen whether his efforts mark a new dawn or a false dawn for the group; his predecessor and namesake, Andy Clarke, predicted that a 5.8% dive in LFL sales in the final quarter of 2015 would mark the nadir of sales performance, only for the next quarter to be even worse.
Wal-Mart, Asda’s owner, is seeing an upturn in fortunes in the US and industry observers are expecting it to change tack as a result to focus more on protecting market share than on boosting profits.
READ Wal-Mart sees like-for-like sales rise in the US for 12th consecutive quarter
Ray Gaul, a vice president at Kantar Retail, said the performance would bring “a temporary sigh of relief” to new boss Sean Clarke and his management team.
“For the past year, Asda has primarily been focused on fixing the basics under the tagline ‘new reasons to shop at Asda’. This has meant the re-introduction of the Asda Farm Stores range and further differentiation in unique products such as the Nspa range of beauty care items and special celebration ranges such as an improved line of Mexican foods. The George lines of clothing and Asda Living lines of homewares and furniture received a hefty upgrade in the period,” Gaul observed.
“This summer’s Holiday Shop and the upcoming Back to School season give us a glimpse on how Asda plans to boost Christmas sales: affordable yet trendy clothes; toys and homewares paired together with premium seasonal food options such as Asda’s five premium gins.
“The success of this Christmas season for Asda will rely heavily on the retailer’s online presence. This will mean introducing new services to Asda’s British shoppers and taking Asda’s show-on-the-road overseas. Innovations such as establishing an Asda gift-card store front on First Data’s website, listing George clothing on the ASOS website platform, and selling Asda and George products on China’s JD.com digital platforms are surely signs of more to come,” Gaul continued, adding that “with Britain’s growing love for Black Friday and Cyber Week offers, Asda will soon face a true test on whether it can improve on the basics and leap into the future of shopping at the same time”.