On a drizzly midweek afternoon, the car park of Crawley's Asda supermarket is bustling with activity. Parents, laden with school bags and groceries, hurry to and from the store, while others load their weekly shopping into their vehicles.

For local resident Carol Stimpson, the Asda is a convenient 10-minute walk from her home, making it a regular destination for her daily needs. "It's essentially my local corner shop," she explains.

Fellow local Joanne Dench also frequents the Crawley Asda, drawn by its diverse range of products, including clothing and international cuisine. "I appreciate the variety they offer, and the international food selection is particularly appealing to me," she says.

Despite the steady stream of customers at this West Sussex Asda, the supermarket chain is facing significant challenges in the market.

The UK's third-largest supermarket experienced a dismal Christmas period, with two sets of industry data indicating a substantial decline in sales, while its main competitors reported increases.

According to Worldpanel, Asda's sales plummeted by 4.2% during the 12 weeks leading up to December 28, 2025, following a disappointing Christmas the previous year.

Food retail analyst William Woods of Bernstein Research characterizes Asda's situation as "a mess."

Industry data suggests that despite Asda's efforts to revamp its strategy and reduce prices, customers continue to defect to other retailers. Asda remains hopeful that its plan will ultimately bear fruit, but others are skeptical about the 60-year-old retailer's ability to recover.

For decades, Asda was renowned for its reputation as Britain's most affordable grocer, a reputation built on its "everyday low prices" and cherished by families.

A generation of consumers grew up with Asda's iconic "That's Asda Price" advertising campaign, which debuted in 1977 and featured shoppers tapping their back pockets to signify the money they had saved.

In 1999, Asda was acquired by US retail giant Walmart in a landmark deal that marked the largest foreign takeover in the UK retail sector at the time.

However, from around 2010, Asda struggled to counter the growing threat posed by discounters Aldi and Lidl, as Walmart's priorities shifted towards its US and international operations.

Asda was sold in 2021, after paying approximately £4 billion in dividend payments to Walmart over the preceding four years.

The supermarket chain was purchased by billionaire brothers Mohsin and Zuber Issa, along with private equity firm TDR Capital, in a £6.8 billion deal.

The Issa brothers, who amassed their fortune through their petrol forecourt empire EG Group, were hailed as self-made entrepreneurs poised to bring fresh perspectives to the business.

However, the acquisition was financed by loading billions of pounds of debt onto Asda's balance sheet, making it one of the largest debt-funded takeovers in recent UK history.

The deal was concluded at the end of the Covid-19 pandemic, when grocery sales were booming, but the market soon underwent a significant shift. The war in Ukraine triggered a sharp increase in inflation and interest rates, driving up the cost of Asda's borrowings.

Following the takeover, Asda's CEO departed, and Mohsin Issa assumed the role.

According to a former Asda executive, "While Mohsin Issa's instincts were sound, the business required an experienced leader to navigate the challenging circumstances."

Asda's problems intensified, exacerbated by high management turnover and shifting priorities.

Store standards declined due to staff hour reductions, leading to customer complaints about empty shelves, slow restocking, and poor online availability.

Lynette, a Swindon resident who had shopped at Asda for over 20 years, noted a significant decline in the store's quality, citing closed checkouts and empty shelves.

Having once been a loyal Asda customer, Lynette has recently begun using discounters Aldi and Lidl for her primary shopping needs.

Behind the scenes, Asda was undergoing a major technological overhaul, transitioning away from the systems it used during the Walmart era.

This included the installation of nearly 16,500 new checkouts, as well as the launch of a new groceries app and website, at a cost of hundreds of millions of pounds.

By autumn 2024, Mohsin Issa had stepped down as CEO, and TDR Capital had assumed majority ownership of the business.

According to Worldpanel, Asda's market share had fallen from 14.3% prior to the takeover to 11.4% by the end of December 2025.

This decline translates to a £4.5 billion reduction in annual revenue, based on current prices, compared to what Asda would have achieved if it had maintained its previous market share.

The grocery sector is characterized by high fixed costs and narrow profit margins, making it challenging for retailers to recover from declining sales volumes. According to Bernstein's William Woods, this can create "a negative spiral that is extremely difficult to escape."

Asda is currently in the midst of a turnaround plan, aimed at reviving its fortunes.

However, industry data suggests that the plan has yet to gain traction, raising questions about whether Asda needs more time to recover or if it will struggle to win back customers.

In an effort to revitalize the business, Asda has appointed the executive who previously helped rescue the company from the brink of collapse over 30 years ago.

Allan Leighton, who took on the role of executive chair in November 2024 at the age of 71, has unveiled a plan to revive Asda's fortunes by re-launching the Asda Rollback price campaign, which he successfully implemented in the 1990s.

The Rollback campaign involves temporary price reductions, followed by the introduction of new "Asda Price" points that are guaranteed to be lower than the original pre-Rollback prices.

Leighton aims to make Asda 5-10% cheaper than traditional supermarkets by the end of 2026, even if it means taking a short-term hit on profits.

One year after the launch of the Rollback campaign, data from retail research firm Assosia shows that Asda's prices on over 30 branded items were generally lower than those of Tesco, Sainsbury's, and Morrisons during the festive quarter.

Asda has also consistently ranked highly in a weekly price survey conducted by The Grocer magazine, which excludes Aldi and Lidl.

According to The Grocer's editor-in-chief, Adam Leyland, "Asda has indeed been 5% cheaper than its established rivals at times over the past year."

However, the price cuts do not appear to have had a significant impact on Asda's fortunes.

Leyland notes that "for shoppers, it's not just about price; customer service, in-store experience, and range are also crucial, as well as perceptions of value and brand appeal."

Madeline in Crawley is among those who have been deterred from shopping at her local Asda, citing her dissatisfaction with the store's weekly offerings.

She notes that her shopping experience is often hindered by empty shelves and obstructed aisles, which can be frustrating and ultimately drives her to shop elsewhere.

A key supplier suggests that Asda's struggles stem from its failure to strike a balance between investing in its stores and maintaining product availability, highlighting the need for the retailer to focus on the fundamentals of its business.

Asda maintains that it is making progress, having increased staff numbers in its stores, in an effort to address the issues that have driven customers away.

However, regaining customer loyalty is a challenging task, particularly in a competitive market where rivals are leveraging price matching and loyalty schemes to attract shoppers.

William Woods argues that Asda's decision to discontinue its year-long price match campaign with Aldi and Lidl in January 2025 was a mistake, citing the success of similar campaigns by Tesco and Sainsbury's in changing customer perceptions.

Woods also notes that the loyalty price schemes offered by Tesco and Sainsbury's, such as Clubcard and Nectar, create a positive experience for customers at the checkout.

Asda acknowledges that its turnaround is a long-term process, expected to take three to five years, and is focused on providing value to its customers, ensuring product availability, and delivering a positive shopping experience.

According to an Asda spokesperson, the company is in the early stages of its transformation, which is centered on offering an unmatched value proposition and ensuring that customers have a positive experience when shopping in-store or online.

The spokesperson adds that this approach is beginning to yield positive results, with stronger sales volumes reported in recent periods.

However, a source familiar with the situation notes that Asda's recovery was disrupted last summer due to the complexities of separating from Walmart's systems, resulting in empty shelves and a disappointing Christmas trading period.

The source acknowledges that the separation from Walmart was necessary, despite the challenges it presented.

Asda's sales have continued to decline, with December marking its 22nd consecutive month of decline, according to Worldpanel sales data.

Industry observers are questioning whether Asda has the resources to regain its lost market share, given its high levels of debt and the significant investment required to drive a full recovery.

In an effort to reduce its debt, Asda sold and leased back several stores and a distribution center, resulting in a net debt of £3.8bn at the end of December 2024, with annual financing costs increasing by 38% to £611m.

A former Asda executive believes that the business is "broken" and that its high debt levels will hinder its ability to invest in the necessary changes to drive a recovery.

The executive argues that the lack of investment in the business over the past 10-15 years has contributed to its current struggles, and that the required level of investment may be unsustainable for the company.

An Asda spokesperson disagrees, stating that the company's strong balance sheet and cash flow generation enable it to meet its current and future debt obligations.

Asda is not alone in its struggles, as fellow supermarket chain Morrisons has also faced challenges under new private equity ownership, selling assets to reduce its debt and losing market share to Aldi.

A major supplier notes that both Asda and Morrisons are working to reduce their debt burdens, which are hindering their ability to compete effectively.

The supplier expresses a desire to see Asda recover, but questions whether it is feasible given the company's current situation.

Ged Futter, a former Asda buyer, now trains suppliers on how to negotiate with supermarkets and fears that his former employer is in serious trouble.

Futter cites an example of a client who was asked to invest in promotions with Asda, but declined due to the high demands being made.

This year, the price of Asda's traded debt has fallen further, indicating that investors are becoming increasingly concerned about the viability of the company's turnaround.

A person familiar with Asda's operations believes that the company has a strong offer, including its in-store pharmacies and opticians, as well as the George clothing brand and a healthy general merchandise business.

Many observers expect some form of consolidation in the supermarket sector, potentially involving mergers, sales, or break-ups.

Allan Leighton's task of turning around Asda is compared to climbing Mount Everest, highlighting the significant challenges that lie ahead.

Lynette, a Swindon local, says she will not return to shopping at Asda, having lost faith in the store.

Asda urgently needs to build momentum, and 2026 is seen as a critical year for the company's turnaround efforts.

Top image credit: Getty Images