Sainsbury’s and Asda lose ground to rivals

THe two supermarkets plotting a £14.1bn merger have lost ground to their rivals since the start of the years, it has emerged.

Sainsbury’s and Asda saw sales growth lag behind archrivals Tesco and Morrisons as well as German discounters Aldi and Lidl in the last three months.

As Sainsbury’s boss Mike Coupe headed to Asda’s head office yesterday to rally more than 3,500 staff to back the deal, the figures came as a blow.

The 57-year-old chief executive held a town-hall type meeting in the atrium at Asda House in Leeds with Asda boss Roger Burnley.

Coupe, a former Asda executive, was back at the supermarket for the first time since he left nearly two decades ago. A cabal of former Asda executives who worked alongside him were instrumental in orchestrating the Sainsbury’s offer.

it included Burnley and Walmart’s international boss Judith McKenna, who joined them in Leeds yesterday, and her predecessor David Cheesewright, a close friend of Coupe.

But Coupe’s attempt to rally staff at Asda came as grocery figures revealed that both supermarkets were lagging behind their rivals. Sales at Sainsbury’s grew a meagre 0.2pc in the 12 weeks to April 22 compared to a year earlier, while Asda’s sales increased 1.4pc. Britain’s biggest grocer Tesco enjoyed 2.1pc growth while Morrisons notched up a 2.2pc rise in sales.

Online grocer Ocado led the pack, growing sales by 12.7pc. But Aldi and Lidl continued to charge ahead with sales growth of 7.7pc and 9.1pc respectively.

The figures highlight the challenges facing the industry which forms a huge part of the reasoning behind Sainsbury’s and Asda joining forces.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said the tie- up marked ‘a pivotal moment’ for the UK grocery market. ‘A merger between Sainsbury’s and Asda would transform the traditional landscape placing nearly a third of market share in the hands of the joint supermarket giant, though the march of the discounters – and any enforced store closures – could impact this figure,’ he said. Addressing 2,000 employees in Leeds and a further 1,500 via video link, Coupe touched on the challenges facing retailers and the benefits of a 330,000- strong team of Asda and Sainsbury’s workers.

Flanked by McKenna and Burnley – who are both former colleagues – Coupe said he was proud to be back at his old workplace. The married father of two spent the early part of his career at Asda where he was tutored by retail guru and Marks & Spencer chairman Archie norman. He also helped build Asda’s online business alongside McKenna. And sources close to Burnley and Coupe said the pair made ‘a fantastic double act’.

Coupe laughed off a gaffe earlier this week when he was recorded singing We’re in The Money between interviews at a television studio. An avid music fan, he is known for inventive ways of boosting staff morale. According to reports, he once serenaded a colleague dressed as a giant prawn with a rendition of James Blunt’s You’re Beautiful in front of 5,000 Sainsbury’s staff to encourage them to sell more seafood.

Yesterday, Coupe told employees how ‘ proud’ he was to step through the doors of Asda’s headquarters for the first time since his departure on ‘such a momentous occasion’.

The meeting is the last time Coupe will see the Asda team for 18 months as the supermarkets remain competitors until the deal is given the green light by regulators.

Before he left, he told Asda staff: ‘Go and compete and make it really tough for Sainsbury’s over the next 18 months.’