Following the release of ASDA’s figures for the 12 weeks ending 30th June 2023; Joe Dawson, retail analyst at GlobalData, a leading data and analytics company, offers his view: “ASDA has consolidated its strong growth in Q1 2023 with a further boost in sales in Q2, ending H1 on a high compared to last year’s weak comparative. Total revenue excluding fuel grew 9.6% in Q2, bringing H1 revenue up to £10.5bn, an 8.7% increase year on year, with sales growth across food, clothing and general merchandise. Food was the standout performer, with like-for-like (l-f-ls) sales up 9.8%, while clothing and general merchandise l-f-ls were more moderate, up 6.3% and 2.8% respectively, compared to a 1.0% decline in food sales and 6.7% decline in non-food sales in Q2 2022. A 3.5% growth in transaction numbers also helped to fuel Asda’s growth, with the retailer achieving significant switching gains from its main rivals in Q2 and reduced losses to discounters.
“A focus on bringing the best value to customers has characterised ASDA’s year so far, with an expansion to its private label range driving 14.7% growth in own brand sales as consumers continue to seek out low prices due to constrained disposable incomes. Price drops and locks have continued to appeal, while a campaign to highlight quality that compared products to premium brands will have improved customer perceptions, helping to broaden the grocers appeal to quality seeking shoppers. The supermarket has won a number of Grocer Gold Awards in 2023 for its low prices compared to its direct competitors, highlighting the success of its Just Essentials range. However the range has now been reduced from 293 to 269 products, perhaps signalling the effect of low prices on margins, and the Grocer reported that Sainsbury’s and Tesco’s loyalty scheme prices have been undercutting ASDA for two weeks in a row. In order to continue on its current growth trajectory ASDA must focus on maintaining its private label proposition and reducing prices on basics in line with the deflation of commodity prices. The ASDA Rewards scheme has also proven to be a success since its introduction in 2022, with 5 million active customers and a 42% participation rate resulting in around 10% incremental sales. This is an impressive feat and will serve ASDA well in enticing new customers.
“ASDA’s clothing sales were promising in Q2 and will have been boosted by consumers shopping for holidays abroad. The end of the summer holidays will be a key time for ASDA to boost sales with its affordable back to school range. General merchandise saw moderate growth, especially in toys & games, and will be focussing on rolling out new products ahead of the festive season.
“H2 will see a number of updates, including Christmas specific rewards and discounts as well as new product rollouts in Denim, Baby and the Big ASDA Toy Shop. An expansion and refresh of mid-tier products will become yet another avenue to appeal to broader consumer groups and the establishment of “lab stores” operational trials could see an improvement in availability and stock levels.”
