Asda is gunning to open 250 of its smaller supermarkets after racking up sales uplifts of more than 50% in its Netto converted stores.
Speaking at an Asda Supermarket in South Harrow, chief executive Andy Clarke said the Netto converted stores are “performing ahead of budget”. He said Asda has converted just under half of the Netto estate and will open its hundredth Supermarket store next week. The stores are between 5,000 sq ft and 25,000 sq ft.
He said: “We originally said we wanted 100 of these smaller supermarkets but we’re so confident in the model that we’re now looking north of 250.
“We think the pricing, quality and service we offer from this format is unusual, and that’s why we’ve been so successful.”
Clarke said Asda would be interested in acquiring parcels of stores if they became available out of the Iceland portfolio but poured cold water on the idea that it would be interested in buying the whole chain.
“Most of the [Iceland] stores are below 5,000 sq ft and that doesn’t fit our model, but if parcels of stores become available then we’ll take a look,” he said.
He also said he would continue to look for stores that had car parking, while many of Iceland’s shops are on high streets with no parking.
Clarke did admit that Asda’s ambition to have 150 Asda Living stores within five years which it laid out last April would now have a “revised timescale” due to the recession. He said: “When we set out those plans the world was in a different place, and now with the economy being a factor, our timescale has changed. We still have the same ambition, it will just take a little longer.”
Karen Hubbard, operations director for small stores, described the small supermarkets as “bringing back old-fashioned supermarket shopping where customers can do a full weekly shop”.
A key difference for Asda from typical convenience stores of its competitors is that the grocer charges the same prices across its portfolio. “We still get customers coming in and asking whether our prices are higher in our smaller shops, so we have a lot educating still to do,” she said.
She said Asda is around 95% satisfied with the operating model of the smaller stores after overhauling the supply chain and distribution.
She also said the ranges would be tailored to the location. In the South Harrow store, Hubbard said Asda “got booze wrong” as the area has a high ethnic population and it carried more alcohol than was needed.
The 8,500 sq ft South Harrow store carries around 8,600 product lines, while the previous Netto carried 1,500. It also has a small range of non-food items including babywear, and underwear. It also offers a kiosk so customers can order the full range of non-food. Clarke said when customers pick up ordered items in store, 75% buy something else too while they’re there.
Hubbard said: “We decided to integrate the non-food with related products rather than having a non-food aisle because that way customers are more likely to buy. If they poke their heads around an aisle and just see non-food they often decide not to go down it as they don’t need anything whereas if they walk past it it is more likely to catch their eye.”
Babywear has been placed next to baby food, and men’s socks next to the men’s deodorants.