“Unsustainable promotions, irresponsible price cuts”
Commenting on a 2.6 per cent drop in sales during Q4 for Asda, Clarke attributed the slump suffered by major supermarket chains over the holiday period to “unsustainable” promotions, irresponsible price cuts and vouchers that were little more than “free money”. Sales overall for last year were down 1 per cent, the chain’s first annual sales decline since 2008.
As a result, believes Clarke, “the retail market remains in one of its most challenging and changeable periods in history.” He also endorsed comments made last November by Mike Coupe, Sainsbury’s chief executive, that supermarkets would suffer a major decline over the next two years. “It’s going to be an incredibly challenging market in 2015 and 2016. Mike is not inaccurate.”
Asda announced last month it intended to invest £300m in price cuts on 2,500 essentials for the first quarter of this year, to lessen the price gap between the company and Lidl.
Most supermarkets performed poorly during the final quarter of last year; Tesco, Sainsbury’s and Morrisons all recorded a decline in sales. However, the latest data released by Kantar Worldwide indicates that Sainsbury’s dislodged Asda from second place in the UK’s supermarket rankings, behind Tesco.
By comparison, discount chains Aldi and Lidl significantly increased their share of the market in the same period, to 4.8 per cent and 3.5 per cent respectively; more than half of all British households visited either of the chains over the festive season.