Leading UK retail chain Asda has reported a slight drop in sales growth for its fourth quarter period, results released today reveal.
In the three months to January 7th 2012 like-for-like (LFL) sales at the supermarket group rose one per cent year-on-year, a drop from the 1.3 per cent increase seen during the previous quarter.
Although growth remains marginal for the business, this performance compares well with market leader Tesco which last month confirmed that its own LFL trading fell 2.3 per cent in the six weeks ending January 7th.
Tesco has lost market share to competitors operating at both the premium and value end of the grocery market in recent months, and Neil Saunders, Managing Director of retail analyst group Conlumino argues that Asda is now also positioning itself well in these financially austere times.
“Asda’s credentials on price are long established and out of all the major grocers it is best positioned to take advantage of the more frugal consumer mindset by capturing the spend of those wishing to trade down,” Saunders commented.
“This has helped it win share from Tesco over the period and has also been beneficial in mitigating defections to the deep discounters.
“The most impressive improvements have been made at the premium end of Asda’s offer. In particular its partnership with Leiths to promote its Extra Special range over Christmas allowed existing consumers to trade up without going elsewhere.”
Despite a steady decline in UK inflation over recent months, many economists and industry observers expect consumer spending to remain constrained for much of the year, making the appearance of providing value-for-money ever more important to the domestic grocery market.
Government figures released today show that grocery prices have risen steeply in the three years since the UK entered recession but the volume of spending has remained stagnant.
Walmart, Asda’s US-based owner and global retail giant, today reported a 3.4 per cent rise in net income across its whole business, which includes operations in North America & Asia, during its quarterly period ending January 31st.