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UPDATE 4-Asda lags UK supermarket rivals as discounters march on
November 17, 2015 / 9:25 AM / in 2 years

UPDATE 4-Asda lags UK supermarket rivals as discounters march on

* Asda third-quarter sales fall 4.5 pct
    * Aldi and Lidl's UK market share passes 10 percent - Kantar
    * Asda boss says price cuts to exceed 1 billion pounds
    * Sainsbury's showing most resilience to discounters

 (Adds comment from Asda CEO at media briefing)
    By James Davey
    LONDON, Nov 17 (Reuters) - Industry data and Asda's own
sales numbers underlined its position as the weakest performer
among Britain's largest supermarket groups, showing it is
suffering most from the rapid growth of discounters Aldi and
    While Asda, the British arm of Wal-Mart, continues
to struggle, Tuesday's data from researcher Kantar Worldpanel
showed that Germany's Aldi and Lidl 
achieved a combined 10 percent of the British grocery market for
the first time, having doubled their share in only three years.
    "The discounters show no sign of stopping and, with plans to
open hundreds of stores between them, they'll noticeably widen
their reach to the British population," Kantar Worldpanel's
Fraser McKevitt said. 
    Asda Chief Executive Andy Clarke signalled that the price
war waged by Britain's "big four" -- market leader Tesco
, Sainsbury's, Asda and Morrisons -- to
lure back shoppers from the discounters is likely to intensify
next year.
    Clarke launched a five-year strategy in 2013 focused on
lower prices but eschewing the money-off vouchers touted by
    He said the company would now spend more on price cuts than
the 1 billion pounds ($1.52 billion) previously forecast in the
    "How much we invest will only continue to rise as we narrow
the gap with discounters and widen the gap to the other three,"
he told reporters.
    Clarke, who last week announced that Asda would not
participate in "Black Friday" promotions this month, forecast a
"tough" Christmas and said that 2016 will remain "very
    Plans announced last month to accelerate investment in
larger stores and put expansion on hold elsewhere should get
Asda back on track, he said, adding that he is also reviewing
Asda's ranges and plans to withdraw about 10 percent of products
"to remove duplication".  
    "We're in this for the long game," he said. "Asda is a
business that's got sustainable long-term growth in this market
and that's something we can be confident about.
    "That may not be the case for all businesses, as we know the
market will consolidate."
    The price war and commodity-led food price deflation has
been largely responsible for falling sales at all of Britain's
big four chains.
    Asda has declined most of late, partly because it has more
customer overlap with Aldi and Lidl in its northern England
heartland, where the economy is also growing more slowly than in
the south east, where Sainsbury's, Lidl and Waitrose are
    Some analysts view Asda as most vulnerable to improvements
at Tesco and Morrisons, both of which have appointed new bosses
to lead turnarounds.
    Kantar Worldpanel said that Asda's sales fell 3.5 percent in
the 12 weeks to Nov. 8, with its market share down 0.7
percentage points year on year to 16.4 percent.
    Separately, Asda reported third-quarter sales at stores open
for more than a year down 4.5 percent. That year-on-year decline
for the three months to Sept. 30 was only a marginal improvement
from the 4.7 percent slump in the second quarter that Clarke had
described as the company's "nadir". 
    Though Asda's sales are falling, it has not reported profit
declines and asset write-offs suffered by all its listed British
rivals, who have also sold assets.
    Parent Wal-Mart did warn on profit last month, blaming
higher spending on wages, e-commerce and price cuts, but it
reported stronger than expected quarterly earnings on
    Tesco sales fell 2.5 percent and Morrisons by 1.7 percent,
the Kantar data showed, in stark contrast to Aldi and Lidl,
where sales soared by 16.5 percent and 19 percent respectively.
    Sainsbury's, which has shown the most resilience to the
discounters, lifted sales by 1.5 percent over the 12 weeks and
its market share by 0.2 percentage points to 16.6 percent,
regaining its status from Asda as Britain's No.2 grocer and
sending its shares up 1.8 percent. 
    Kantar Worldpanel said sales growth in the overall UK
grocery market was 0.5 percent, held back by a 1.7 percent fall
in prices.
 Market share (percent) and sales growth (percent)
                  12 wks to     12 wks to     pct change
                  Nov 8, 2015   Nov 9, 2014   in sales
 Tesco            27.9          28.7          -2.5
 Asda             16.4          17.1          -3.5
 Sainsbury        16.6          16.4          1.5
 Morrison         10.8          11.1          -1.7
 Co-operative     6.3           6.2           1.5
 Waitrose         5.2           5.1           2.7
 Aldi             5.6           4.8           16.5
 Lidl             4.4           3.7           19.0
 Iceland          1.9           2.0           -0.6
 ($1 = 0.6574 pounds)

 (Additional reporting by Emma Thomasson,; Editing by Keith Weir
and David Goodman)

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