Asda chief executive Andy Clarke is confident that the grocer’s efforts on quality are being recognised by customers, despite the tough climate taking a toll on its growth.
Clarke told Retail Week: “It takes time when you introduce any changes but our customers are recognising our efforts now and it puts us in a gooda place on trading for the rest of the year.”
Asda relaunched its mid-tier own-label brand as Chosen By You last year, with an emphasis on quality. Clarke said Chosen By You was now the fastest growing own-label brand according to Kantar.
In the past Asda has been criticised for having just one string to its bow – price – but Clarke saw progress in its three target areas of price, quality and service. “Price remains incredibly important and the price gap between us and our competitors is increasing,” he said. “Customers have always talked about great service but now they are also talking about our quality.”
Asda’s like-for-like sales edged up by 0.5% in its second quarter to June 30, slightly down on the first quarter figure of 0.8%. Shopper numbers fell by 1.2% but Asda’s average ticket price rose by 1.7%.
Market share figures issued separately by Kantar this week showed Asda at the back of the pack among the big four grocers. Data for the 12 weeks to August 7 showed that Asda, including recently acquired Netto, suffered market share erosion from 17.6% to 17.1%.
Asda’s share excluding Netto fell from 16.9% to 16.7%. Tesco also had a dip, from 30.8% to 30.5%. Sainsbury’s share was static at 16.1% and Morrisons was the only one of the big four to achieve growth: its share inched up from 11.6% to 11.7%.
Clarke said: “The figures reflect that we have some space challenges but we should see the effect of the start of the Netto conversions in the next set of data. We’re pleased with the progress we’ve made and are catching up with the businesses ahead of us.”
He said Asda’s food business was much stronger placed than apparel and general merchandise, which was “a reflection on the market as a whole in that non-food is having a tougher time”.
Small is beautiful
Asda is to open its 100th small supermarket next week and wants 250 by 2015. The portfolio of shops, measuring between 5,000 sq ft and 25,000 sq ft each has so far consisted mostly of stores that were among the 147 bought from Netto. Asda chief executive Andy Clarke said the converted stores were delivering sales uplifts of more than 50%.
Asda’s small-store portfolio has lagged rivals and the Netto deal gave it a leg-up in the space race. Clarke said Asda was searching for more space, and he would be interested in taking a parcel of Iceland stores if they became available.
The Asda supermarkets carry about 10,000 lines compared with Netto’s previous 1,500. Clarke said the stores were designed as convenient rather than convenience stores, big enough so “you can do your full weekly shop”.
The stores carry a selection of general merchandise, integrated with related food – for example, babywear is next to baby food. Stores also have kiosks and click-and-collect facilities enabling customers to order from Asda’s full non-food offer.
Clarke admitted that tough trading conditions had demanded a “revised timetable” for Asda’s goal of having 150 Asda Living stores within five years – a target laid out in April last year. “We still have the same ambition, it will just take a little longer,” he said.