Asda the big loser in war of grocers as sales slump

ASDA has emerged as the biggest loser in Britain’s supermarket price wars following a catastrophic year.

The company – which is owned by US retail giant Walmart – said profits plunged 19.9pc to £657.2m in 2016 after revenues fell 3.2pc to £21.7bn.

The figures underlined the crisis at Asda as it struggles to hang on to customers in the face of stiff competition from discounters Aldi and Lidl as well as its traditional rivals.

The so-called big four supermarkets – Tesco, Sainsbury’s, Morrisons and Asda – have tried to win back business from discounters by cutting prices. But analysts said Asda has also neglected its stores – meaning customers looking for cheaper goods still head to Aldi and Lidl while those looking for choice shop elsewhere.

‘Asda has been the big loser in the supermarket wars,’ said Molly Johnson-Jones, senior analyst at retail experts Global Data. ‘When you go into an Asda, the queues are longer, the range is worse and the stores don’t look as good. Asda sacrificed shopping experience and customer service for price, which has backfired.’

Asda suffered a 5.7pc fall in sales at its established stores last year – even worse than the 4.7pc slump in 2015 – as customers flocked to its rivals.

Its share of the grocery market in the UK fell by 0.9 percentage points to 15.7pc.

‘Competition in the sector has remained intense,’ the company said. ‘Our sales performance, relative to the market, was behind our expectations.’

But analysts warned that the company has a long way to go to get back on track.

Phil Dorrell, a former marketing chief at Asda who is now at consultancy Retail Remedy, said the firm ‘had a lot of catching up to do’.

He added: ‘It is not changing significantly or fast enough to pull around the results. It did not get its proposition right.’