Asda price proves to be a success for sales Rupert Steiner
ASDA chief executive Andy Clarke has warned that Britain is seeing a two-speed recovery, as the grocer widened the gap with rivals by posting strong second-quarter sales.
The boss of the UK’s second largest supermarket was pleased with the performance but concerned that the economy was still ‘challenging’.
‘Levels of real income are very varied,’ said Clarke. ‘There is undoubtedly a twospeed recovery as there may be a disparity in the regions in terms of the recovery.
‘It is clear from the feedback that in certain r egions f amilies are more challenged than others and we can see that our value offer is more important in certain regions than others.’
Shoppers are still struggling to make ends meet as wages have failed to keep pace with inflation, meaning that customers are unable to buy as much in their weekly shop.
On Wednesday it looked like the Bank of England would almost certainly hold off on any early rise in interest rates as it cut the forecast for wage growth in half.
There are concerns that once interest rates move above their historic 0.5pc low
‘Power to the consumers’
some people will struggle to cope with the higher cost of borrowing.
Asda has fared better than many of its rivals through a sharp focus on cutting prices and by resisting many of the gimmicks such as vouchers and promotions used by other supermarkets.
‘The growth of the discounters has made pricing more transparent,’ said Clarke, who also believes the rise of the smartphone has resulted in increasing numbers of shoppers comparing prices in store.
‘The rise of mobile phones has given power to the consumers,’ he said.
Asda, which is owned by the world’s largest retailer Wal-Mart, posted a 0.5pc rise in second-quarter sales up from the 0.1pc seen at the last quarter.
And Asda was the first of the big four retailers to try to counter the impact of the discounters by tak- ing an axe to prices, spending £1bn in bringing down costs.
Finance director Alex Russo said the difference in price between Asda and the discounters was ‘as narrow as it has ever been’.
Rivals Tesco and Morrisons have both had to issue profit warnings and launch cost-cutting campaigns as Aldi and Lidl take market share.
‘Click and Collect’ now accounts for 10pc of online orders at Asda and is expected to treble to 30pc over the next five years.
Asda opened three new super- stores and two supermarkets during the second quarter. It is also testing three new-format stores filled with different concepts which it could roll out in 2016.
Clarke said: ‘ Innovation, low prices and customer service remain at the heart of our business.’ Parent Wal-Mart reported better than expected second quarter sales of £89bn, up 2.8pc on the previous year, but guided that full-year profit would be below expectations.
It blamed investment in healthcare and online shopping.