Asda (Strategy)

UK strategy

Acquired by EG Group in 2021 

Asda returned to private hands in 2021 after the Competition and Markets Authority (CMA) greenlit the £6.8bn sale of the grocer to global convenience and forecourts specialist EG Group and its founders the Issa brothers in June. This followed an eight-month investigation into potential competition concerns.  

Former owner Walmart had been looking to sell Asda after its proposed merger with Sainsbury’s was vetoed in 2019. The US giant has retained an equity investment and a seat on the Asda board as part of an “ongoing commercial relationship” following the acquisition by EG.  

The highly leveraged deal saw EG taking on significant debt to fund it, but the ownership change was appealing to Asda because it provided a huge opportunity to catch up in convenience, where it has been well behind Tesco and Sainsbury’s, by virtue of EG’s extensive forecourt network. 

Facilitating this, in October 2023, ownership of EG Group’s UK and Ireland operations, covering some 350 EG petrol station sites and over 1,000 food-to-go locations, transferred to Asda (see below).  

The grocer said the acquisition would also strengthen its financial profile, creating a group with combined revenues of around £28bn. 

Amid its significant debt pile, Asda completed a refinancing of £3.2bn of its debt in May 2024, which it said will push the “majority of its maturities into the next decade”.

Nailing value to support customers in cost-of-living crisis 

As the most value-focused of the big mainstream grocers, underpinned by its Every Day Low Price (EDLP) and Rollback price reduction programmes, nailing value during the current cost-of-living crisis is a key priority.  

Initiatives have included the launch of a more extensive value range under the Just Essentials banner, as well as a new Rewards loyalty programme, in 2022.     

Comprising some 300 products, Just Essentials was twice as extensive as the Smart Price range it replaced.   

The launch formed part of a wider reset, including range simplification, and was followed by the rolling out of its Asda Rewards loyalty app across all stores and online following a successful trial. Developed in partnership with Eagle Eye, the Rewards scheme enables customers to build up “cashpots” depending on their spending.  

Further supporting customers grappling with soaring inflation, Asda has also launched a series of price-match schemes.  

Its ‘Dropped and Locked’ campaign saw prices on 100 core products dropped and locked in price until the end of 2022, with prices reduced by an average of 12%.   

Asda announced it was investing a further £9m in reducing the price of more than 200 products by an average of 14% in October 2023. This latest round of cuts followed £35m investment in lowering prices in July and August and brought year-to-date investment in pricing to £130m across 600 products.  

And ramping up its low-price strategy, at the beginning of 2024, Asda became the first UK supermarket to price-match Aldi and Lidl on nearly 300 products, reducing prices by an average of 17%.  

New branding

Asda introduced a new brand identity in May 2024 as part of its Serious About Summer campaign, which aims to “regain” Asda’s “relevance and individuality” and included the addition of a new dark green tone to the recognisable “Asda green”.

Catching up in convenience 

Accelerating expansion in the convenience sector, as noted above, Asda completed the £2.07bn purchase of EG Group’s UK and Ireland operations, covering around 350 petrol station sites and over 1,000 food-to-go locations, in October 2023.  

Combined with Asda’s existing c-store network, and 119 sites it acquired from the Co-op in October 2022, the acquisition extends its convenience estate to around 700 locations, all of which will now come under the Asda fascia.   

Conversion of the former Co-op c-stores to Asda Express is due to complete by the end of the first quarter of 2024. 

Asda had launched its new Express convenience format in 2022, with a couple of stores up and running by the end of the year and initial plans for 30 more in 2023. The retailer said this formed part of a “test-and-learn” approach to developing its future convenience model.  

And in December 2022, Asda announced the acceleration of its push into the convenience store market with plans to open 300 Express stores by 2026, as “a key part of [its] growth strategy”.  

Asda said the Express concept would allow it to serve customers in areas where it does not have a superstore or supermarket nearby.  

It opened its 100th Express store in November 2023.  

The Express stores stock around 3,000 products, including a “comprehensive range of fresh, ambient and chilled groceries”, hot and cold food-on-the-go options, and partner brands such as Leon.  

The stores also offer ‘to you’ parcel collection and return services, and a rapid delivery service through Uber Eats.  

Asda said a strong convenience model was a key element in its “strategic vision to become the UK’s second-largest supermarket” ahead of Sainsbury’s. 

Speaking in January 2024 as its expansion programme ramped up again, Asda vice-president of convenience Andy Perry said: “After pausing our convenience rollout during the festive period, the programme is now in full swing once more. We have exciting plans to accelerate the programme over the next couple of months with the aim of converting all 470 stores acquired from the Co-op and EG Group to Asda Express before the end of Q1. 

“We are looking forward to opening our doors and welcoming customers in new locations right across the UK.” 

Perry is due to exit the company when the conversion programme of former Co-op and EG Group sites to Asda Express sites is due to complete in March 2024. Former vice president and group property director Chris Walker will take over as managing director of Express stores.

Improving quality 

As part of its push into convenience, Asda is improving the quality of its food-to-go and ready meals from summer 2023, adding around 50 new products, including a deli-style offering.  

The grocer registered new brand name, The Health Kitchen, in August 2023, in a bid to bolster its nutrition credentials.  

It also continues food innovation, in May 2024, launching a new premium, own-brand range called Exceptional by Asda, which it said would “elevate” its premium-tier offering. The grocer described the launch of Exceptional as “the next step” on its investment journey into own-brand products, having invested over £170m into these ranges since 2022.

Turning to partnerships to extend proposition and make store space work harder 

Asda has been ramping up its commitment to partnerships from 2020 to make use of surplus space within its largest stores.  

The retailer has collaborated with more than 40 different partner brands since then and by March 2022 had more than 1,000 partnership propositions across 400 stores. The focus since then has been rolling out the most successful partnerships which are ready to scale. This includes the rapid rollout of in-store units from jewellery and accessories specialist Claire’s, which is set to be stocked in over 500 Asda supermarkets by the end of 2023.  

Partnerships are another area in which Asda stands to gain from the expertise of owner EG Group which has long-established relationships with the likes of Greggs, KFC and Starbucks. All of these franchises have transferred to Asda from late 2023.   

TDR Capital to become a majority owner while hunt for new CEO  remains ongoing 

With a successor for former boss Roger Burnley, who departed following the 2021 ownership change amid a slew of other senior departures, still to be appointed, co-owner Mohsin Issa has been overseeing day-to-day operations. Shoring up its senior leadership team towards the end of 2021, Asda appointed former Marks & Spencer boss Lord Stuart Rose as its chair. Rose also chairs EG Group.  

The retailer confirmed in late-2023 that it is still on the hunt for a permanent chief executive and will recruit new independent non-executive directors to ensure strong corporate governance. 

From early 2024, reports circulated speculating that that co-owner Zuber Issa was considering selling his £500m stake in Asda to majority shareholder TDR Capital, which followed news that his brother Mohsin would be stepping back from day-to-day operations at Asda with the intention of appointing a new CEO. 

Indeed, in a transaction set to complete in the third quarter of 2024, TDR Capital became an Asda majority owner after it acquired Zuber Issa’s share in the business. Mohsin Issa remains co-owner, alongside TDR Capital.

At the completion, TDR will own 67.5% of Asda and Mohsin Issa will own 22.5%, while former majority owner Walmart holds a 10% stake.

TDR Capital, which bought the business alongside the two Issa brothers in June 2021, said that alongside the Issa brothers it has “supported Asda to accelerate its strategy, with a particular focus on delivering low prices to customers and expanding into the fast-growing convenience retail segment”.

Asda is still seeking a new chief executive.

Plans for George 

Speculation had been mounting that the Issa brothers might look to sell George to raise cash, but the retailer has confirmed that the clothing brand will not be spun off. Asda said its new owners had earmarked investment to grow the George offer and try to pull in younger shoppers.  

‘Mixed-use redevelopment’ to create ‘town centre’

Asda intends to create a ‘new town centre’ in London that includes 1,500 homes. The grocer announced in May 2024 that it will redevelop its 10-acre Royal Park site in North West London in partnership with property developer Barratt London.

The site houses its Park Royal Superstore and the proposal, which is subject to planning approval, includes creating a ‘new town centre’ featuring a new 60,000 sq ft flagship Superstore, parking spaces for up to 400 cars, and some 1,500 new homes, of which around 500 will be “affordable”.

The retailer said: “Sustainability will be at the heart of this new site – with the scheme providing significant biodiversity and ecology net gains”.

Asda head of mixed-use developments Ian Lawrence said: “Asda’s venture into mixed-use property re-development marks a significant milestone for the business. By working with leading developers like Barratt London, we are able to maximise the full potential of our property portfolio for the first time.

“This allows us the opportunity to better serve local communities like Park Royal, with a new flagship store fit for the future, whilst creating windfall sites for housing delivery. We are also unlocking further opportunities to release value from our extensive property portfolio, which can be reinvested back into the business to fund other initiatives and support our long-term growth ambition to become the UK’s second largest supermarket chain.”

Increased focus on tech  

Following the failed merger with Sainsbury’s in 2019, Asda went on record with an increased commitment to technology to drive growth. Initiatives have included the introduction of same-day grocery deliveries and the rollout of scan-and-go payments to create a “hassle-free” shopping experience for customers.  

As part of this focus, Asda’s Stevenage supermarket has become a “tech store”, where a range of new technology is implemented “to help the retailer understand the benefits” of different innovations. 

Real-time AI solution to support execs with actionable insights

Asda has teamed up with AI company Harley from mid-2024 to modify its gen-AI platform to provide data insights to its executives to help them make faster and better decisions.

The “live, actionable insights” the platform delivers will support executives in making quicker, well-informed decisions in order to bolster performance.

Users’ questions are answered in seconds via charts that visualise data, tables for calculations or plain text.

Harley can provide Asda with real-time descriptive analytics on datasets, including sales growth in a specific store, or data on how weather and availability affected sales.

Asda VP of data and analytics Simon Jury said: “Harley’s real-time AI solution is the future of how people are going to interact with data. By integrating into Asda’s data ecosystem, the collaboration unlocks new levels of operational agility through rapid data-driven decision-making, setting a new standard within the retail industry.”

Separation from Walmart under tech transformation programme 

The separation from Walmart means a huge amount of technology across the grocer’s 650 supermarkets and 20 distribution centres - to say nothing of its ecommerce channel - needs to be renewed. Costs of £189m were incurred in FY2022 (up from £24m in 2021) relating to investment in the Project Future tech transformation programme.  

CIO Carl Dawson says the real opportunity for Asda is the eradication of all legacy systems and to build new ones in the cloud.  

Among its new systems, Rise with SAP S/4 Hanna on Microsoft Azure has been chosen as its core ERP system, with SAP Business Technology Platform and SAP Ariba selected for procurement.  

A big part of the transformation process will be data optimisation.  

Dawson says the aim is to consolidate the data from its various data warehouses and systems in a single “data lake” built on an Azure data stack, which can be accessed by its new cloud-based systems once these are in place.  

A delivery team has been assembled to work with the grocer’s tech partners to implement the new systems, while Dawson has beefed up the tech team to ensure that the grocer has the right internal skillset to successfully complete the transformation process.   

Asda has poached Morrisons’ chief information officer Matt Kelleher as its first chief digital officer. Kelleher takes up the newly created position in July 2024, taking responsibility for the supermarket group’s data and ecommerce functions. He will also lead all Asda’s technology functions once its “ongoing technology transformation project ‘Future’ is complete”.  

A series of high-profile partnerships have been developed over recent years. These include:  

  • Tata Consultancy Services (TCS) - Building digital infrastructure to streamline supply chain, forecasting, buying and merchandising processes, HR processes, warehouse management and ecommerce processes
  • Salesforce - Leveraging Salesforce’s full retail suite, including Commerce Cloud, Service Cloud, and Marketing Cloud, Asda is creating a cloud-first environment that gives customers one connected and consistent experience across every channel and device, no matter where or how they choose to interact with the brand.  The Asda team will use headless ecommerce architecture and progressive web apps to build the customer experience, allowing it to separate its front-end and back-end ecommerce applications and giving it full control over the web experience. 
  • Dassault Systèmes - Deploying Dassault’s ‘Perfect Logistics’ solution to optimise transport services, and the flow of goods between its suppliers, distribution centres and stores.
  • Retail Insight - In May 2024, Asda extended its partnership with Retail Insight to use the latter’s machine learning-driven software, InventoryInsight, to help the grocer achieve inventory accuracy.
  • Veeam - Partnering with backup, recovery and data management specialist Veeam since the end of 2022. 
  • ServiceNow - Partnered with digital workflow company ServiceNow from early 2022. The cloud-based Now Platform has been applied to mobile devices on the shopfloor and laptops in the office to enhance productivity.   
  • BlueYonder - Teamed up with supply chain specialist Blue Yonder for the implementation of end-to-end systems covering commercial, supply chain, logistics and retail operations. This includes AI-powered forecasting, end-to-end supply chain visibility, omnichannel fulfilment and workforce management capabilities. 

Transformation of online grocery business following Walmart separation 

Ecommerce is one of Asda’s main strategies for growth. 

The grocer is partnering with digital transformation specialist Publicis Sapient from early 2023 to deliver the full transformation of its online grocery business following separation from Walmart.  

The initiative - scheduled for completion by April 2024 - will transition Asda’s ecommerce business onto its own state-of-the-art platform from former owner Walmart’s managed systems.   

The project will integrate Publicis Sapient’s core SPEED capabilities - strategy, product, experience, engineering and data and AI - for an end-to-end transformation, “building a best-in-class, agile operating model that will create exponential value in terms of customer experience”. 

As part of Asda’s transformation programme and commitment to implementing a new tech solution by 2024, Publicis Sapient has already built and implemented Asda’s new email marketing tool using Salesforce to give the grocer a 360-degree view of its customers and enable it to personalise the shopping experience. 

Ramping up rapid-delivery partnerships  

Asda has been behind its competitors in partnering on rapid delivery but now has around 350 stores on the Deliveroo platform, offering the service alongside Uber Eats Asda grocery delivery and its Just Eats partnership.  

The extension of its partnership with Deliveroo came as the pair launched a new rapid-delivery site in Tottenham Hale, north London. The Delivery Hop site offers over 1,300 Asda products for delivery within 15 minutes.  

Supply chain 

The Issa brothers have pledged to invest more in Asda’s supply chain, particularly to “increase the proportion of UK-based suppliers” in categories like chicken, dairy and potatoes, and a commitment to source 100% British beef.   

The ‘Every Day Low Cost (EDLC) mantra is at the heart of Asda’s operational strategy, a big driver of which has been the purchase of its International Procurement Limited (IPL) subsidiary that has enabled Asda to focus on developing direct relationships with producers by removing unnecessary process from the supply chain. 

Asda operates its own logistics network, Asda Logistics Services (ALS), with two hubs and two deconsolidation centres serving 26 depots across the UK.   

Distribution from RDCs to stores is undertaken by logistics partners that include Wincanton and Clipper Logistics. 

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