UK supermarket Asda has lost its mojo and has a big fight to get it back

Rain drifts across the car park of Crawley's sprawling Asda, but the gloom does little to slow the steady stream of shoppers this midweek afternoon. Parents hurry past with school bags and groceries; car boots slam shut as people load up their weekly shops.

For Carol Stimpson, who grew up in the area, the Asda is only a ten‑minute walk from her home, and she pops in most days. "It's my corner shop," she says.

Joanne Dench, another local, is also shopping in Crawley, and says she visits the town's Asda for its variety. "They've got a good range of stuff — clothes, all sorts of things... And they have lots of international food, which is lovely because I like trying new things."

But despite the bustle in this West Sussex Asda, the chain has been losing ground to rivals at an alarming rate.

The UK's third biggest supermarket had a dreadful Christmas. Two sets of industry data show Asda suffered a big slump in sales while all its main rivals reported an increase.

Asda's sales decreased by 4.2%, during the 12 weeks to 28 December 2025, according to Worldpanel — and that's off the back of a terrible Christmas the year before.

"A mess" is how William Woods, a food retail analyst from Bernstein Research, describes Asda's situation.

The industry data suggests that despite Asda embarking on a turnaround and cutting prices, shoppers are still turning away. Asda's hope is that with time the plan will work out, but the question others are asking is whether this 60-year-old retailer is really able to turn things around?

For decades, Asda had the reputation as Britain's cheapest grocer, a slightly cheeky northern-based business loved by families for its "everyday low prices."

A generation grew up with its "That's Asda Price" TV commercial, first featured in an advert for the supermarket in 1977, showing shoppers tapping their back pockets signalling they'd saved money at the tills.

The business was sold to the US retail giant Walmart in 1999, in what was then the largest foreign takeover in the UK retail sector.

But from about 2010, Asda struggled to fend off the growing threat from Aldi and Lidl as Walmart's global priorities focused on its businesses in the US and elsewhere.

In 2021 it sold the chain. In the four years leading up to the transaction, Asda paid just over £4bn to Walmart through a series of dividend payments.

Asda was bought by two billionaire brothers from Blackburn and the private equity firm TDR Capital for £6.8bn.

Mohsin and Zuber Issa made their fortune by building a petrol forecourt empire, EG Group. They were hailed as self-made entrepreneurs who would inject fresh thinking.

But the sale was financed by adding billions of pounds worth of debt onto Asda's business — one of the UK's biggest debt-funded takeovers in recent history.

It was a controversial deal inked at the end of a Covid boom in groceries, when people were spending much more time at home and less money eating out. But the market soon changed. The war in Ukraine triggered a huge rise in inflation and a new era of rising interest rates, pushing up the cost of Asda's borrowings.

Following the takeover, Asda's CEO left, and Mohsin Issa took over the reins.

"His instincts were good, but it needed an experienced figure to guide the business through the very choppy waters," says one former Asda executive.

The problems grew, compounded by high management turnover and shifting priorities.

Store standards fell after cuts in staff hours and shoppers complained about empty shelves, slow restocking, and poor online availability.

Lynette from Swindon first started shopping at Asda more than 20 years ago, but says it began to go "downhill" really quickly — "you could see it in the supermarket, half the tills were closed, shelves were empty."

Once a loyal Asda shopper, she has within the last few years begun using the discounters, Aldi and Lidl for her main shopping.

Behind-the-scenes, Asda was also working through a huge tech overhaul as it moved away from the systems it used under Walmart.

This included installing close to 16,500 new checkouts and launching a new groceries app and website — costing hundreds of millions of pounds.

By autumn 2024, Mohsin Issa had stood down from his role. TDR also took majority ownership of the business, putting them in the driving seat.

Asda's market share stood at 14.3% just before the takeover, according to Worldpanel, at the end of December 2025, it had fallen to 11.4%.

Comparing this to the value of the grocery market overall, you end up with a business that is £4.5bn smaller in terms of annual revenue, at today's prices, than it would have been if Asda had maintained this share, according to Worldpanel sales analysis.

Grocers have high fixed costs and slim profit margins. If you can grow the amount of stuff you sell, your profits can increase quickly, but the reverse can happen if your volumes decline (you sell fewer products in total) — leading to "a negative spiral which is really, really difficult to get out of," says Bernstein's William Woods.

Asda is now in the midst of a turnaround plan.

But, judging by the industry data, there's been little sign of traction. The question is, does it simply need more time, or will it be unable to win customers back?

The company has brought in the man who helped rescue Asda from the brink of collapse some thirty years earlier, to revive its fortunes.

Allan Leighton was appointed executive chair in November 2024, then aged 71. His big plan? The revival of Asda Rollback, the price campaign which he deployed, successfully, in the '90s.

"Rollbacks" are temporary price reductions. This time round, after the Rollback ends, the products are then moved to a new "Asda Price" which are "guaranteed" to be lower than the original pre-Rollback price.

Leighton said his aim was to make Asda 5-10% cheaper than other traditional supermarkets by the end of 2026, and he was prepared to take a big hit on profits, in the short term, to achieve it.

One year on from its launch, Asda's pricing has improved. Data provided to the BBC by retail research firm Assosia shows that Asda's prices on more than 30 branded items were mostly cheaper than Tesco, Sainsbury's and Morrisons based on promotional deals over the festive quarter.

The retailer has also regularly come top of a closely watched weekly price survey run by The Grocer magazine. It doesn't include Aldi and Lidl.

"At times in the last year, Asda has certainly been 5% cheaper than all its established rivals," says Adam Leyland, editor-in-chief of The Grocer.

The trouble is, the price cuts don't appear to have made any difference.

"For shoppers, it's not just about price," says Leyland. Customer service, in-store experience and range is also important as well as perception about "value" and brand appeal.

That sentiment is echoed by Madeline in Crawley. She says she avoids doing her weekly shop at the town's Asda.

A lot of the shelves are quite empty, and there are always trolleys in the aisles when they're filling up shelves. Sometimes you can't get to where you want to be — it puts you off.

One key supplier I spoke to said Asda needed to strike a better balance by investing more in stores and availability, and getting a grip on "the basic fundamentals of retailing".

Asda has put more staff in stores and insists it is making progress.

But once you've lost shoppers, it's very hard to win them back, especially when many of your rivals are firing on all cylinders, helped by price matching and loyalty schemes, in an intensely competitive market.

William Woods believes Asda should have stuck to its year-long Aldi and Lidl price match campaign, which ended in January 2025. He says price matching has been a "great psychological mechanism" for Tesco and Sainsbury's to change customer perception and fight the discounters.

Their respective loyalty price schemes, Clubcard and Nectar, also create a "wow" factor at the till, Woods says.

Asda points out that rebuilding the business is a three to five year journey.

"We are in the early stages of our transformation," a spokesperson said. "This is anchored in offering an unmatched value proposition, making sure products are always available and ensuring customers have the best possible experience when visiting our stores or shopping online.

This approach is beginning to be reflected in stronger volumes over recent periods.

One person familiar with the situation said there had been signs of a recovery last summer, but that coincided with the final stage of Asda's separation from Walmart's systems. This caused disruption, leading to empty shelves in the all important run up to Christmas trading, a "nightmare" putting the turnaround six months behind schedule, they said.

"It's annoying, disappointing, but we had to get out of the Walmart system,".

In December, Asda registered its 22nd consecutive month of decline, according to Worldpanel sales data.

Many in the industry are wondering if it has the necessary firepower to regain all the lost ground. Even if it can fix the basics, will Asda's high levels of debt prevent a full recovery?

It sold off a raft of stores and a distribution centre – and then rented them back – to help reduce its borrowings. At the end of December 2024, its net debt stood at £3.8bn, whilst the annual financing costs, including debt interest payments, increased 38% to £611m.

"It's an amazing brand…. but sadly, I believe the business is totally broken," the former Asda executive believes.

"Whoever the owner is, I just don't think the business can stomach, or the balance sheet can't stomach, the level of investment that is required. The lack of investment goes back 10-15 years," they claimed.

An Asda spokesperson said its "strong balance sheet and underlying free cash flow generation" means it can comfortably cover current and future debt obligations.

Like Asda, Morrisons has also been struggling under new private equity owners and has been selling assets to reduce its debt pile. It has lost all important market share and the number four spot to Aldi but its performance has recently stabilised.

According to the major supplier, both businesses are in a race to get out of the debt burden, which is holding them back.

"I would love for them [Asda] to get back to where they were. Whether it's feasible is another question..." the supplier says.

Ged Futter spent fifteen years working as a buyer for Asda. He now runs a business training suppliers on how to negotiate with supermarkets and fears his former employer is in "real trouble".

I was with a client today who said Asda was asking for this investment for promotions. The client said I'm walking away. What they asked for is too much. I'm backing another horse.

This year there's also been a further fall in the price of Asda's traded debt — a sign that investors are getting more nervous about the viability of the turnaround.

The person familiar with the workings of Asda says they believe it has a compelling offer with its in store pharmacies and opticians, as well as the George clothing brand and a general merchandise business that is healthy.

The view among many observers I've spoken to is that some form of consolidation in the sector seems, at some point, inevitable — whether that means supermarkets breaking up, being sold, or merging.

Allan Leighton has compared his task to climbing Mount Everest. Certainly, winning back customers will be no mean feat.

Swindon local Lynette says: "I don't think I will ever go back to shopping at Asda again, I might pick up the odd thing there, but they've lost me as a loyal customer."

Asda badly needs some momentum, and 2026 feels make or break for the turnaround.

Top image credit: Getty Images

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Source: BBC
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