Asda sales slide for 7th consecutive quarter – but turnaround may be in sight with renewed marketing focus

Asda suffered its seventh consecutive fall in sales – this time down 5.7 per cent in this year's first quarter – with the Walmart-owned giant accepting that growth from the discounters and the intense price competition has left it in a precarious position.

The retailer has earmarked some £1.5bn to be invested into lowering the price of goods on its shelves (£500m of which was ploughed into the fund at the beginning of the year). However, it has failed to attract shoppers through the doors.

Walmart’s chief financial officer, Brett Biggs, said today (19 May): “The UK continues to struggle, due primarily to fierce competition.

“Improvements in price and product availability throughout the quarter were not enough to overcome traffic and food volume declines in our large format stores.”

Price, for a long time, has been the focus of Asda’s marketing and it has struggled to define itself beyond being the cheapest supermarket. But the long-running 'Everyday Low Prices' proposition no longer resonates as strongly as it once did, given a basket of similar good from Aldi and Lidl will come out on average 10 per cent less.

So while another consecutive quarter of dismal sales is bad news for chief executive Andy Clarke, it could prove to be the final piece of evidence that newly instated marketing boss Andy Murray needs to stop the retailer obsessing over price in its customer-facing comms and instead shift to advertising that shows a bit of creativity and personality.

It has fallen on ad agency Saatchi & Saatchi to come up with the goods. The Publicis Groupe shop is more than familiar with the inner workings of Asda, having managed the ad business for some 20 years during the peak of its trading before the account was shifted to VCCP in 2013.

It’s been back in the hands of Saatchi for little over a month but promises have already been made that the “latest creative techniques and cutting edge technology” will be embraced by the retailer’s marketing team.

The benefits of doing so have arguably already been made evident by rivals. After years of trying to woo customers based on offers, Morrisons made a move earlier this year to try and talk up its ‘made fresh in store’ proposition and the role that it plays in family life. Sales have steadily grown and in stark contrast to Asda it noted a promising 0.7 per cent rise in like-for-likes for the first quarter. Similarly, Tesco’s marketing revamp and injection of humour into how it talks to customers is aiding a steady recovery.

Phil Dorrell, managing partner of consultancy firm Retail Remedy and former marketer at Asda, said the supermarket does offer a lot more than price, “it just hasn’t shouted about it in the media or in store.”

“With sound store positions and a broad offer (if unexciting and too low end), Asda has the ability to bounce back. But a blinkered price strategy won’t be the answer,” he added.

The creative output of a partnership with celebrity chef James Martin are yet to be revealed, but a press release announcing the tie-up last month suggested he would serve to inspire customers and show the quality of Asda's goods, rather than promote prices. This will be the first campaign from Saatchi & Saacthi.

Elsewhere, e-commerce sales were “soft” according to Walmart’s Biggs, increasing by just seven per cent globally in the first quarter on a constant currency basis, which “is not as strong” as it wanted.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, suggested that at the rate at which Asda is losing customers it might “consider entering a new kind of channel.”

Morrisons, for example, recently entered into a deal with Amazon to supply hundreds of fresh, frozen and ambient products to the online giant.

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