Asda cites low prices and quality as key to success across markets

The Wal-Mart owned grocer said it is continuing to grow market share, as customers remain attracted to its low prices and its improving product quality.

In its second quarter, Asda’s like-for-like sales eased slightly to 7.2% compared with 8.4% the previous quarter. It said its market share is up from 16.7% to 17%.

Asda chief financial officer Judith McKenna said the slowdown in like-for-likes was largely the result of a drop in food inflation, which she said had hit a two-year low.

The supermarket operator said its aggressive cost-reduction programme has meant it is also growing its profit ahead of sales.

McKenna said: “By continuing to be the lowest price retailer and by broadening our appeal, we’re attracting more customers and increasing our sales volumes.”

According to TNS Worldpanel, for the 12 weeks to August 9, Asda’s sales growth was 8.3%, delivering a share of 17.2%. Asda said its grocery sales via Asda.com are “growing rapidly”. It opened its home shopping centre – for grocery home deliveries – in Morley in Leeds last week.

It said Asda Direct continues to grow strongly and customer satisfaction levels are “extremely high”.

McKenna added: “Customers continue to be somewhat cautious, with many people choosing to use any extra money they have to pay down debt and save more. This is not going to be a straight line economic recovery, however, in this environment, we are well placed to continue gaining market share.”

Last week, Asda staff from stores and depots were awarded a £1.6m shares payout. Staff who have held options for three years can now cash in on the profit by selling their shares. Each staff member will receive £130 should they choose to sell.