Asda seems to have taken an early advantage in the UK grocery price war, posting a resilient increase in like-for-like trading during a difficult third quarter of its financial year, it was revealed today.
Sales excluding fuel and VAT grew 1.3 per cent LFL in the three months ending September 30th 2011, with average spend in store rising 2.6 per cent year-on-year to help offset the 1.3 per cent drop in total footfall.
The only grocer in the UK bigger than Asda is Tesco, which saw UK LFL trading for its second quarter fall 0.5 per cent, and recent weak sales prompted it to initiate its Big Price Drop offer which cut £500 million off its prices.
US retail giant Walmart, owner of Asda, had already implemented a price match guarantee of ten per cent cheaper than its rivals however and it believes that this promise is helping it see growth during a restrained period of consumer spending.
Doug McMillon, President & CEO of Walmart International, said: “The UK grocery market is entering into what is traditionally a heavy promotional period in time for Christmas. Asda however, continues with a very simple promise to customers - our prices are ten per cent cheaper than the competition on comparable baskets, or we’ll give you the difference.
“And Asda’s customers like it. Since this year, the prices of more than 13 million baskets have been checked online.
“Expenses grew slower than sales in the third quarter. To deliver cost savings, sustainable productivity programmes are embedded in our operations, which help fund lower prices for customers.”
Walmart recorded an 8.2 per cent rise in net sales year-on-year in the three months to October 31st, with international sales rising even faster at 20 per cent compared to 2010.
Other announcements from Asda today included the completion of its refurbishment work on the stores it purchased from Netto this year, and a target of £800 million in savings through sustainability initiatives by 2020.
McMillon continued: “The conversion of the Netto stores to Asda supermarkets continues to progress on schedule, and sales and profits are exceeding our expectations. More than 70 per cent were trading as Asda Supermarkets by the end September, and today we have only a few left to complete.
“Asda’s online grocery sales continued to grow strongly in the third quarter, and now customers can order groceries using a smartphone. The on-time delivery rate has improved, with 19 of 20 customers receiving their purchase within the allotted time slot.
“Asda opened a record number of stores this quarter, for a total of 83, which includes 77 Netto conversions. This brings Asda to a total of 542 stores, including 139 Supermarkets.”