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‘Desperate’ customers buying less food as incomes fall, warns Asda chair

File photo dated 21/02/08 of the Asda Logo, as the supermarket chain posted lower sales as shoppers tighten their belts (Rui Vieira/PA) (PA Wire)
File photo dated 21/02/08 of the Asda Logo, as the supermarket chain posted lower sales as shoppers tighten their belts (Rui Vieira/PA) (PA Wire)

Customers are buying fewer items and turning to cheaper products after witnessing a plunge in their household incomes, the chair of Asda has warned.

Lord Stuart Rose told the PA news agency that the supermarket group’s shoppers are “making desperate decisions about spending” as the cost-of-living crisis continues to bite.

It came as Asda posted a plunge in sales for the first quarter of the year.

Lord Rose, a former chief at Marks & Spencer, said some customers are “saying they can only spend £40 in a shop and will put anything back if it comes over that”.

Lord Stuart Rose, Asda’s chairman (PA Media)
Lord Stuart Rose, Asda’s chairman (PA Media)

He stressed that he could not predict the outlook for inflation but cautioned that customers should not expect an imminent improvement.

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“I can’t predict how long this cost inflation will continue for but it is not suddenly going to disappear,” he said.

“I think there will be a levelling off at some point but we are seeing wheat prices still increasing dramatically, oil prices rising, butter too.”

The boss added that product availability in some areas has been “patchy” as the company continues to tackle supply chains issues related to the invasion of Ukraine and coronavirus restrictions in some regions.

Asda said its own data showed that household disposable income fell by a record £40 a week last month as the jump in energy prices put finances under more pressure.

Shoppers are sticking to smaller budgets and lower-priced items (Aaron Chown/PA) (PA Archive)
Shoppers are sticking to smaller budgets and lower-priced items (Aaron Chown/PA) (PA Archive)

Lord Rose made the comments as the supermarket business, which was bought by the billionaire Issa Brothers and private equity backers TDR Capital, revealed sales slid by 9.2% in the quarter to March 31.

Like-for-like food sales stepped back 7% against the same period last year as shoppers dined out more following the easing of pandemic restrictions.

Clothing and general merchandise sales also fell sharply – falling 19.3% and 23.7% respectively – as they were impacted by the reopening of non-essential retailers.

It comes as Asda continues to be run without a permanent chief executive officer, after Roger Burnley left the business last year.

Lord Rose said it will hire someone in the role but that it will not happen “any time soon”.

The group has hired former Nisa boss Ken Towle as it retail director and announced recently that former Morrisons finance chief Michael Gleeson will become Asda’s new chief finance officer.