ASDA's CHRISTMAS

Asda's Christmas Crisis: Worst Sales Performance Since 2015

Asda, one of the UK's largest supermarket chains, is facing its toughest holiday season in years. According to recent figures, the supermarket saw its worst Christmas sales since 2015, with a significant drop of 5.8% in sales during the crucial festive period. This decline has raised concerns about the future of the retailer as it grapples with a shrinking market share and increasing competition from rivals like Tesco and Aldi.

Sales Slump Hits Asda Hard

The most recent data from analyst firm Kantar revealed that Asda's total sales over the 12 weeks leading up to December 29 fell to £4.59 billion, down from £4.87 billion in the same period last year. This dip marked the worst performance for Asda during the pre-Christmas run since 2015 when it also reported a 5.8% drop in sales.

With Christmas being one of the most crucial times of the year for supermarkets, this poor showing has raised many eyebrows, especially since the slump was worse than the performance of many of its competitors.

The Gap Between Asda and Rivals Grows

While Asda's sales declined, its competitors fared better. Tesco, the UK's largest supermarket chain, increased its market share from 27.7% to 28.5% by the end of December. Sainsbury’s, another heavyweight in the market, also saw a slight increase in its share, moving from 15.8% to 16%.

In contrast, Aldi, the German discount supermarket chain, continued its rise, increasing its market share from 9.9% to 10%. This means that the gap between Asda and its rivals, particularly Aldi, is narrowing, and the competition is becoming fiercer than ever.

Asda’s Struggles Under Private Ownership

Asda has been under private ownership since its takeover by TDR Capital and the Issa brothers, Mohsin and Zuber, in February 2021. Since the acquisition, the company has faced several challenges. These difficulties were compounded by the departure of its CEO, Roger Burnley, in 2021, leaving Asda without a permanent leader for over two years.

In late November, Allan Leighton, a seasoned retail executive, replaced Lord Rose as chairman. He has been tasked with turning the company around, focusing on restoring Asda's "DNA" by cutting prices and improving value for customers. However, he has warned that it may take up to five years to recover from this slump and stabilize the business.

Can Price Cuts Help Revive Asda’s Sales?

Despite the dismal Christmas sales performance, there’s a glimmer of hope for Asda. In the weeks following Christmas, the supermarket reported a slight improvement in sales, with a 0.4% rise in the four weeks ending December 29.

Leighton has already started implementing changes to boost sales, including a major price reduction initiative. As part of the "Big January Price Drop," Asda has cut the prices of thousands of products both in-store and online by an average of 26%. This could attract customers looking for better deals, especially during a time when many families are feeling the pinch of rising costs and inflation.

Price Inflation Adds Pressure on All Supermarkets

The wider grocery sector has also been under pressure due to rising inflation in prices. According to Kantar, grocery price inflation reached its highest level in 10 months, rising to 3.7% in the four weeks leading up to December 29. This inflationary pressure has been a major concern for all supermarkets as they struggle to absorb higher costs.

Supermarket leaders, including Sainsbury’s CEO Simon Roberts, warned of the challenges ahead as the government’s recent tax increases are expected to drive up operating costs. Despite these challenges, supermarkets like Tesco and Sainsbury's have managed to maintain steady sales, putting Asda at a disadvantage as it continues to lose market share.

The Road Ahead for Asda: A Long Recovery

For Allan Leighton and the team at Asda, there’s no quick fix. The latest figures show just how steep the uphill battle is. Asda’s market share has slipped to 12.5%, down from 13.5% last year. This is a worrying sign, especially as the competition between the UK's major supermarkets heats up.

Leighton has admitted that the road to recovery could take as long as five years. The supermarket is also on the hunt for a permanent CEO to replace Roger Burnley, which could be key to turning the company around. Until then, Asda will need to rely on aggressive pricing strategies and a strong executive team to navigate the stormy waters ahead.

Can Asda Catch Up with Tesco and Aldi?

Asda’s Christmas sales slump has cast a shadow over its prospects, with the gap between it and market leaders like Tesco and Aldi continuing to widen. Despite the early signs of a sales boost following the price cuts, it’s clear that the supermarket chain has a long road ahead.

Will the changes under Allan Leighton’s leadership help Asda claw back market share? Or will Tesco, Sainsbury’s, and Aldi continue to pull ahead, leaving Asda struggling to catch up?

The next few years will be crucial for Asda as it fights to regain its footing in a fiercely competitive market. The Asda Christmas sales decline may have been its lowest in years, but whether the supermarket can recover and thrive remains to be seen.