THE chief executive of Asda has declared 2015 to be the "most challenging year yet for traditional supermarkets" as the grocer reported a 3.9 per cent fall in first quarter sales.

Andy Clarke said the industry has seen "unprecedented" change in the last quarter, citing price deflation and highlighting the challenge brought by the discounters to established players.

However, reiterating Asda's commitment to its five-year strategy, which has seen it invest £21 million in store hours and increase click and collect sites by 94 per cent to 611 stores in the last quarter, Mr Clarke said the supermarket "won't buy short term sales at the expense of long-term profitability."

Referring to steps taken by unnamed rivals to deal with the changes in the sector, which has seen the likes of Tesco, Morrisons and Sainsbury's scale back expansion plans, cut costs and invest heavily in price cuts, Mr Clarke said: "This last quarter has been unprecedented. We have seen deflation in the market and exponential shifts in the industry.

"Although I still believe that 18 months ago we did a great job of predicting changes, we could not have foreseen what's happened to others and the moves they have had to make in order to restore their business - creating an impact on us in the short term.

"Whilst I take no pride in reporting a negative number, we are in a period of expected turbulence, not distress. We won't buy short-term sales at the expense of long-term profitability."

The retailer unveiled research into how the most recent recession and downturn had affected consumers. It found 83 per cent of shoppers are saving discretionary income rather than spending it, and that 43 per cent feel they have less money now than before the recession in 2008. This is despite the latest Asda Income tracker suggesting families are £16 better off per year compared with the previous year.