Sales are strong at Asda but high fuel costs keeping shoppers away

City A.M. Reporter
SUPERMARKET group Asda yesterday reported a pick up in third-quarter sales growth, helped by revamped own-brand food ranges and a pledge to be cheaper than rivals.

Sales at stores open more than a year rose 1.3 per cent, excluding fuel and VAT sales tax, in the three months to September, Britain’s second-biggest supermarket group said yesterday.

That followed 0.5 per cent growth in the second quarter and 0.1 per cent in the first.

But customer traffic fell 1.3 per cent and the average transaction rose 2.6 per cent in value in the third quarter, as cash-strapped shoppers made fewer trips in the face of high fuel prices, it said.

“The cost of petrol and household utilities will continue to be the biggest contributors to the squeeze on personal disposal incomes,” said Helen Dickinson, head of retail at KPMG.

“This squeeze will continue to affect retail spending which has remained largely subdued even as we enter the peak trading period of the year, Christmas.”

Asda, which trades from 542 stores, lagged Britain’s grocery market for most of 2010, but has fought back this year, helped by its purchase of smaller format Netto stores and a relaunch of its own-brand food range.

The chain, which completes the conversion of former Netto stores next week, said it was benefiting from a “price guarantee” that offers to refund customers the difference if an online price comparison website does not show their shopping was at least 10 per cent cheaper than at a rival.

Asda said over 13m baskets have been checked online this year.

With the grocery market entering what is traditionally a heavily promotional Christmas period, data from market researcher Kantar Worldpanel last week showed Asda growing faster than the overall grocery market for the first time since early 2010.

Asda’s underlying sales growth compared with 2.4 per cent increase reported by Wm Morrison Supermarkets, a one per cent rise from J Sainsbury and a 0.7 per cent drop for Tesco.

Asda also said it was on track to deliver £800m savings by 2020 through sustainability initiatives.