Asda boss says he will ‘restore confidence’ as IT fiasco hits sales

The boss of Asda has said it will have to win back customers after losing sales due to a botched IT transformation.

Executive chair Allan Leighton said the group’s turnaround had been pushed back by six months after the rollout of its ‘Project Future’ upgrade caused issues.

Asda blamed ‘inconsistent’ stock levels and ‘a poor customer experience online’ for sales plunging 2.8 per cent to £5.3billion over the three months to 30 September.

This was a huge drop compared to the 0.2 per cent fall in the three months to 30 June, the previous quarter.

Leighton said: ‘Clearly, we will have lost some customers, and we have lost some customers – but there’s always an opportunity to win them back.

‘Particularly on grocery home shopping, we will have to rebuild that customer base and restore some confidence in that part of our business.’

The supermarket has been grappling with falling sales since it was taken over by private equity

Asda has been pinning hopes on the overhaul, which it says is the biggest in European retail, to put the group back on track after having to separate its systems from former owner Walmart.

The UK’s third largest grocer is nearly a year into what Leighton reckons will be a three to five year revival mission.

Asda’s market share has shrunk since its takeover four years ago by private equity firm TDR and the billionaire Issa brothers.

Revealing the latest dismal sales, Leighton said he had made ‘good progress’ this year, citing ‘a notable price gap versus competitors’.

He said he was ‘pretty confident’ in his turnaround strategy but said the IT fiasco had ‘put us back six months’.

‘In recent weeks, our availability has gone back up to those record highs of eight years ago, and I can see the sales recovering,’ he said.

The grocer has been ‘ultra aggressive on pricing’ to entice customers away from other supermarkets in the run up to Christmas, Leighton added, 

Closely-watched industry figures from Wordpanel show Asda’s market share at 11.8 per cent  – its lowest since the retail research firm began collecting the information in 2011.

In the 12 weeks to 1 November, sales fell by 6.5 per cent, making Asda by far the worst performer, according to another researcher, NIQ.

And some retail analysts are even predicting that discount retailer Aldi could be just weeks from overtaking Asda as the UK’s number three behind Tesco and Sainsbury’s.

‘If current sales trajectories continue, Aldi could feasibly overtake Asda in the next six to 12 months, particularly if cost-of-living pressures persist and shoppers remain focused on value,’ expert Jonathan de Mello told the Mail on Sunday earlier this month.

Despite concerns about consumer confidence, Leighton said Brits were still set to spend big at Christmas and ‘we always think it’s going to be worse than it is’.

But he warned that customers were ‘obviously not reacting positively’ following the Budget this week, accusing Labour of doing ‘5000 things that are hampering growth’.

He said: ‘The country is stuck in reverse, ok. It needs two things, growth and productivity. Nothing that the government is doing is helping either of those two things.’

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