ASDA said it expects Christmas to be very tough after 90 per cent of its customers said they would spend the same amount or less money on festive treats this year.
The news came as the Leeds-based grocer reported another sizeable fall in quarterly sales as shoppers decamped to cheaper rivals Aldi and Lidl.
Asda’s CEO Andy Clarke said the group hopes to narrow the price difference between Asda and the discounters to just five per cent. At the moment it believes it is 10 per cent more expensive than Aldi and Lidl after being 20 per cent more expensive four years ago.
Asda said like-for-like sales fell 4.5 per cent in the 13 weeks to September 30, which comes after a 4.7 per cent fall in the second quarter – its worst ever quarterly sales slide, described at the time by Mr Clarke as the group’s “nadir”.
Explaining why sales had not picked up, Mr Clarke said: “The market continues to be hugely challenging. We have seen a marginal improvement.
“We are not the only business to talk about non-food having a very challenging quarter. It was unseasonably warm year on year,” he added, referring to the warm weather which hit autumn clothing sales.
“It will be a very challenging Christmas for all of us.”
Asda said that while customers have £18 a week more to spend than last year, 68 per cent said they plan to spend the same amount on Christmas as last year and 21 per cent said they would spend less.
Despite this, Mr Clarke said that the group won’t be distracted by “short term gimmicks” such as vouchering or complex price matching schemes. Asda recently said it will abandon its Black Friday sale following the mayhem of previous years when fights broke out.
Mr Clarke said customers would prefer lower prices in the run-up to Christmas than big discounts on just one day. So far this year the group has spent £300m on price cuts.