‘There was no Christmas cheer at Asda, but don’t rule out a happier new year’

A few months back I wondered whether Asda could stage a Christmas fightback, but that proved not to be the case. Its performance over the golden quarter looked like a Christmas nightmare. Even as households spent a record sum of £460 each on groceries overall during the Christmas period, according to this week’s data from market monitor Kantar.

Tesco added market share over 12 weeks to reach 28.5% – an 0.8 percentage point share gain was the biggest of all the grocers. Sainsbury’s sales advanced 3.5% to give it a share of 16%, its highest since 2019.

Discounters Aldi and Lidl both added sales and took share. Asda in contrast haemorrhaged business, the only supermarket group to do so as sales plummeted almost 6% and its share slipped a whole percentage point to 12.5%.

Leighton certainly has his work cut out for him, but he appears to have immediately identified some of the issues at the root of Asda’s difficulties.

Speaking to colleagues at Asda House last month, soon after his appointment, Leighton highlighted some of the grocer’s traditional strengths that he believes have been lost and must be regained – notably price competitiveness, Asda’s ‘DNA’ and more engaged staff.

Leighton added: “I’ve been struck in all my conversations so far about the need for us to get back to our Asda DNA. This is a fantastic business, with fantastic colleagues, and a clear purpose in delivering the value families demand from us.”

Asda in contrast haemorrhaged business, the only supermarket group to do so as sales plummeted almost 6% and its share slipped a whole percentage point to 12.5%

Asda put Leighton’s words into action as it kicked off the new year with a new round of price cuts. Its ‘Big Jan Price Drop’ reduced the cost of 2,500 products by an average of 26% on a variety of third-party and own-label products.

Expect more of the same because Asda is not the only grocer slugging it out on price. Morrisons too, which like Asda is in turnaround mode, revealed a raft of price cuts of its own this week to match Aldi and Lidl.

Tesco and Sainsbury’s also run price-matching schemes against the discounters. Although not new, the existence of the programmes illustrates how firmly Aldi and Lidl have established themselves in shoppers’ eyes as price leaders. Aldi and Lidl have respectively reported their “best ever” and “most successful” Christmas trading, showing that they remain as powerful as they have ever been.

That means Asda has lots of ground to make up to recapture ground that was once indisputably its own when it comes to value for money.

At the same time, Aldi and Lidl both flagged in their Christmas updates a strong performance from their premium lines as shoppers traded up. As Asda seeks to improve performance, it will need to devote energy to product quality alongside pricing basics.

Success will depend upon execution in-store, by re-engaged and re-energised employees so Leighton is right to have signalled their importance.

Asda has lots of ground to make up to recapture ground that was once indisputably its own when it comes to value for money

On that front, at a variety of companies, Leighton has proved himself adept in the past. So far – and unsurprisingly given how recently he returned to Asda – there have been no big initiatives but it would be surprising if none are forthcoming pretty soon because time is of the essence in achieving an Asda revival.

A head office restructuring at the end of last year sadly led to job losses, but the aim was to simplify communications between the coalface and central offices, making them “true support centres in the service of our stores”.

That admittedly was an initiative undertaken during the tenure Leighton’s predecessor Lord Rose, but the direction of travel is evident. The first people Leighton spoke to as he started were store managers, and he has been out and about in branches since taking up the role.

Change is only just beginning and for Asda it may have been a glum Christmas – but it might well be a happier new year.