Supermarket giant Asda has launched a stinging critique of the Labour government, accusing it of damaging consumer confidence, while also admitting to "self-inflicted" problems from a major IT overhaul that has severely impacted its performance.
IT System Transition Causes Major Disruption
Boss Allan Leighton, who returned to lead the chain last year, revealed that a botched £1 billion IT upgrade has set the business back by an estimated six months. The transition from a legacy system linked to former owner Walmart was completed in the third quarter of this year but caused significant operational headaches.
The changeover severely disrupted the flow of stock between depots and stores, leading to what Asda described as "inconsistent availability levels across stores and particularly online." This resulted in a poor customer experience throughout August, notably affecting the retailer's app, website, and home delivery sales.
Sales Slump and Road to Recovery
Mr Leighton stated that the sales decline over the past three months was directly linked to this internal disruption. He confirmed that while availability has now returned to levels seen in June and operational issues are reducing, the company does not expect to recover its market position from the second quarter of 2025 until the same period in 2026.
"It's put us back by around six months, but we now have the base to allow the business to grow," he said. Despite the challenges, Asda continued to invest in price reductions during the quarter as part of its strategy to regain market share lost to rivals like Tesco, Aldi, and Lidl.
Government Budget Adds to Consumer Worries
Beyond internal problems, Asda's chairman took aim at the wider economic climate. He cautioned that consumers are now "confused and concerned" following the Chancellor's autumn Budget, creating an additional headwind for retailers.
While it is too early to gauge the full impact on festive spending, Mr Leighton suggested the government's fiscal policy is "killing confidence" among shoppers. This criticism comes against a backdrop of sustained high food inflation and ongoing pressure on household finances, complicating Asda's efforts to turn around its fortunes.
