Following today’s release of ASDA’s figures for the 52 weeks to 31 December FY2022; Joe Dawson, retail analyst at GlobalData, a leading data and analytics company, offers his view: “ASDA’s second year under new management has been more positive, rectifying a weak performance in FY2021, albeit against tough comparatives, as it reported a 0.1% rise in total sales excluding fuel in FY2022. The sales declines it saw in H1 were left behind as ASDA reported strong sales growth in Q3 and Q4 of 4.9% and 5.5% respectively, largely driven by high food price inflation in the UK. However, it has been unable to keep pace with the total food & grocery market, which GlobalData forecasts to have grown by 1.8% in 2022. Tesco recorded similar growth in the same period as ASDA’s Q4, with UK like-for-like (l-f-l) sales up 5.3% for the 19 weeks to 7 January 2023, while Sainsbury’s l-f-l sales grew 5.9% in the 16 weeks to 7 January. Although ASDA cemented itself as the third largest grocer in the UK in terms of market share in 2022, Aldi is hot on its heels, having recorded sales growth of 26% in December 2022. Lidl also reported an impressive 25% increase in sales over the festive period, highlighting the ongoing challenge for traditional supermarkets to keep their products affordable and of high quality to stave off the discounters.
“ASDA’s steady performance in Q4 can be attributed to a strong pricing and customer service strategy in the face of the cost-of-living crisis. The grocer launched its Just Essentials opening price point range at the end of Q2 and maintained its year-long commitment to lock prices on popular, everyday products, catering to the consumer demand for affordable groceries which has prevailed as food inflation remains high and rose again in February. This focus on low prices continued in the festive period, and it was named the most affordable of the traditional supermarkets in The Grocer’s frozen and premium festive shopping basket price comparison, which will have helped to boost Christmas sales. Away from its core food proposition, non-food l-f-l sales rose 1.0% in Q4, driven by a 16% boost in sales of the George homewares range, with a 78% increase in sales of winter and energy saving products as consumers sought to reduce their energy bills. In contrast, clothing sales fell by a disappointing 5.1% due to poor stock availability.
“Following the success of Tesco’s Clubcard, ASDA introduced its ASDA Rewards loyalty scheme in August, which has since gained 4.2m active customers. Participation in the scheme has been solid, accounting for 37% of sales overall and over 50% of online sales, helping the grocer record its highest average weekly orders in Q4. The gamified experience of completing “missions” to gain a set reward and promotion of “star products” provides another dimension besides savings and loyalty points, giving an incentive for shoppers to continue purchasing from ASDA instead of switching to the discounters.”
