Asda boss warns of another tough year for supermarkets

The Asda chief executive warned some famous grocer brands may disappear, as the price war with discounters forces further consolidation in an interview with The Telegraph​. Clarke told the BBC that there will be “winners and losers” ​in the retail sector this year.

“There are fewer retail facias on the landscape today than 10 years ago, even three years ago,”​ Clarke told the newspaper. “If you look forward 10 years, I am sure there will be fewer again. Making a call on who is, of course, the big question. But I am sure there will be further consolidation.”​

Rising sales in the discount sector​

Further consolidation will be driven by the twin factors of rising sales in the discount sector – which was growing at “a phenomenal rate”​ – and growth of online sales leading to restructuring.

One consequence of consolidation could be the disappearance of some household grocery brands, as the retail sector saw mergers, acquisitions or failures, he added.

Clarke also predicted in The Telegraph​ interview that Tesco will bounce back after being rocked by an accounting scandal last year​. 

But Tesco’s troubles will tarnish the reputation of the whole supermarket sector, he added. “The things that have been reported, however right and wrong, are a little bit like Horsegate for the industry. It has an impact on consumer trust, which isn't good for anybody.​

“So even if you are a retailer dealing with things in the right way, which we would say we are, that is still going to reflect on the reputation the industry. For me that is a much greater concern.”​

‘We’ve never seen it before’​

In a separate interview with BBC 5 Live’s Wake Up to Money​ programme, the Asda boss warned this year could prove as challenging as 2014. “The level of profitability decline in some retailers over the course of 2014 – we’ve never seen it before. It suggests 2015 is going to be equally challenging.”​

And the market share commanded by discount retailers Aldi and Lidl will continue to rise, he predicted. “The discounters will grow and there will be winners and losers.”​

Asda is the nation’s second biggest food retailer after Tesco and the leading performer of the Big Four supermarkets, according to the latest industry sales figures. But sales at Tesco, Asda, Sainsbury and Morrisons are all under pressure from discount stores Aldi and Lidl.

Last July Asda revealed plans to axe 1300 jobs​ but said it would create 5,630 jobs, as part of its restructuring plans.

The Asda boss became president​ of the grocery think tank IGD on January 1 2015.

Meanwhile, supermarket grocery sales recovered ​in the fortnight up to Boxing Day, after a lacklustre early start, according to data published today (January 5) by Information Resources International.