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Tesco and Asda take sales hits in discount battle

Published: 11:30 17 Nov 2015 EST

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Big supermarkets are facing challenge from price-cutters

There was more bad news for troubled supermarket giants Asda and Tesco on Tuesday.

Sales at Tesco fell 2.5% in the 12 weeks to November 8 against the same period a year ago, according to figures from Kantar Worldpanel (KW).

That was also worse than the 1.7% drop faced by the chain in the equivalent period to October versus a year ago.

And sales at Walmart-owned Asda, which had held second place in the market, were down 3.5%, the retail research group said.

Asda also itself reported a 4.5% fall in like-for-like sales for the three months to 30 September. It said sales volumes remained under pressure from discount supermarkets.

Sales at Asda have now fallen for five quarters in a row, making it the worst-performer among the established UK supermarkets.

In the previous quarter, Asda sales fell 4.7%, marking its worst performance since it opened half a century ago.

Asda chief executive Andy Clarke said the UK grocery market was still tough but the chain was strong enough to overcome it.

Tesco's figures are likely to put pressure on new chief executive Dave Lewis to prove his turnaround strategy is working.

Lewis has cut back on loyalty scheme cut-price vouchers in favour of reducing prices on a range of staple goods.

Arch-rival Sainsbury's (LON:SBRY), meanwhile, regained its position as Britain's second-largest supermarket by increasing its sales in the period by 1.5%.

That was higher than the 1.1% gain made by the chain in the equivalent period to October versus a year ago.

Morrisons' (LON:MRW) sales fell 1.7%, wider than the 1% fall in the previous period.

Discounters Aldi and Lidl grabbed a combined 10% of the British grocery market for the first time.

KW's head of retail and consumer insight, Fraser McKevitt, said: "Sainsbury’s has seen its fourth consecutive period of growth, flying in the face of tough market conditions.

"Its 1.5% increase in sales was sufficiently ahead of the market for the retailer to increase its share by 0.2 percentage points – the first share gain registered by any of the ‘big four’ retailers since October 2014.

"The food-focused retailer traditionally increases its market share over Christmas, so we can expect to see it keep hold of second place for the time being.”

Shares in Tesco, however, rose 2.75p to 168.95p. Sainsbury's progressed 5.4p to 248.6p and Morrisons picked up 1.4p to 155.1p.

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