Asda sales and market share rise driven by pricing policy

Asda, the UK arm of US retailing giant Wal-Mart, yesterday said sales growth accelerated in its first quarter and it won market share as a focus on low prices and a revamped own-brand range appealed to budget-conscious shoppers.

Britain’s second-biggest supermarket chain behind Tesco said sales at shops open for a year or over, excluding fuel and VAT, rose 2.2 per cent in the 12 weeks to 31 March. That followed a rise of 1 per cent in the 14 weeks to 7 January, which Asda reported as its fourth quarter period.

Chief executive Andy Clarke said: “Customers really valued our price leadership, the ongoing improvements in quality and our commitment to warm and friendly service.”

Recent industry data has shown Asda growing sales faster than all of its main UK rivals and achieving a record market share of just under 18 per cent.

Many of Britain’s retailers are struggling as shoppers grapple with higher prices, muted wage growth and government austerity measures, and worry about job security, a shaky housing market and fallout from the eurozone debt crisis.

Grocers have fared better than most stores thanks to their focus on low prices. But supermarkets have also seen sales growth slow sharply from a few years ago, with Tesco issuing a shock profit warning in January.

Asda, which trades from 544 stores, lagged Britain’s grocery market in 2010 but fought back in 2011, helped by its purchase of smaller format Netto stores and a re-launch of its own-brand food range.

It has also benefited from its “price guarantee” which offers to refund customers the difference, via a voucher, if an online price comparison website does not show their shopping was at least 10 per cent cheaper than at a rival.