Asda mulls small stores stores for London grocery market push

The grocer is looking to loosen its big four rivals’ stranglehold on the capital as time pressed Londoners pile into small stores.

It is understood petrol stations, rather than standalone convenience outlets, are likely to be the focus.

Asda retail director Mark Ibbotson told Retail Week that the retailer will use data gleaned from its two small petrol station forecourt stores in Sale and Leeds, which opened last year, to decide whether to bring convenience to London.

He said: “We have two petrol stations that we are interested in bringing value to customers through. Looking for growth opportunities is challenging and you never rule anything out.”

“We are going to have to do something different in London, it’s a big opportunity. Customers are paying too much in London.”

He added: “We are known for price. Delivering value has to be core to our principles and we are looking at channels we are going to trade in.”

Asda’s low cost model has long been seen as a barrier to entry into the lucrative but costly convenience market.

Ibbotson said: “We have to have a return on investment, whatever formats we go into it has to be profitable. We are interested in any channel.”

Asda was last week overtaken as the UK’s number two retailer by Sainsbury’s due to its lack of exposure to the rapidly growing convenience market, according to Nielsen.

Asda this week opened a new store in Chadwell Heath, East London.

“We just have to push ourselves to get more supermarkets within the M25. This town is driving the UK out of recession.

“Sainsbury’s started on Drury Lane and we started in Leeds. Like Morrisons, we are a northern business,” Ibbotson said.

He added Asda’s multichannel model would also increasingly allow it to access Londoners via collection of online orders at stores offering Collect+ and off-site collection points.

The Asda brand has 47% awareness among shoppers in the south, according to research by the retailer.

Asda is also giving over space in some of its larger stores for community use after non-food sales migrated online and back office space in older stores was made redundant by changes in processes.

The grocer is also piloting a revamped version of its cafes in two stores featuring an improved food offer and modernized signage.