Asda sales accelerate as price guarantee proves hit

Asda

Asda, the British arm of U.S. retailer Wal-Mart said sales growth accelerated in the second quarter as its online price guarantee, which undercuts rivals by 10 percent, proved popular with cash-strapped consumers.

Britain's second-biggest supermarket chain behind Tesco  said sales at shops open over a year rose by 50 basis points excluding fuel and VAT sales tax in the three months to June 30, compared with a 0.1 percent rise the quarter before.

"Asda continues to gain recognition for saving people money every day, supported by the 10 percent online price guarantee, and now more than 250,000 baskets are being checked online by customers each week," the company said.

The scheme allows shoppers to use a price comparison website to check their overall spending against competitors. If Asda is not 10 percent cheaper than its largest rivals, customers can print out a voucher to recoup the money on future purchases.

Asda lagged sales growth at most of its main rivals in 2010, but has fought back in recent months, boosted by a 100 million pound relaunch of its own-brand groceries.

Figures published by market research company Kantar Worldpanel on Tuesday showed shoppers migrating to lower priced stores and trading down to cheaper goods.

Retailers have struggled as shoppers grapple with higher prices and austerity measures but retail sales grew at their fastest annual pace since April last month, helped by greater discounting.

Tesco in June reported a second consecutive fall in quarterly UK sales and missed forecasts, while rival supermarket J Sainsbury  reported a pick-up in sales growth but warned of tough times ahead.

On Tuesday, Sainsbury said it was launching a trial of its own price match scheme, which will match branded groceries with Asda and Tesco at the till, with customers receiving an instant coupon should the Sainsbury goods be dearer.(Reuters)