Following today’s release of Asda’s figures for the 12 weeks ending 31st March 2023; Joe Dawson, retail analyst at GlobalData, a leading data and analytics company, offers his view: “Following a boost in sales in Q4 2022, Asda has continued on an upwards trajectory in Q1 with growth in food, clothing and general merchandise. Its quarterly results reflect an improvement on the prior year’s underperformance, with the expansion of its affordable food ranges and a diversification of its clothing offering paying off and delivering its growth in food sales of 8.5% in line with GlobalData’s estimate for the food & grocery market in Q1 2023. The grocer saw like-for-like sales growth in both general merchandising and clothing, as it expanded its clothing range to include brands like New Look and Missguided, extending its appeal to a younger fashion seeking range of consumers than George.
“Asda’s transformational acquisition of EG Group’s UK and Ireland operations follows its purchase of 132 forecourt sites from Co-op in late 2022, further expanding its potential convenience store footprint. The convenience channel has been a key weakness for Asda historically, as its predominantly larger store focussed approach has left it playing catch up to other supermarkets that reaped the benefits of the increased demand for convenience brought about by the Covid-19 pandemic and consumers’ increasing preference for local top-up shops. These acquisitions will see a rolling out of more Asda Express stores and will likely be a major source of growth for Asda in coming years. EG Group’s foodservice partnerships will be useful to Asda in improving its in store experience for consumers, adding food courts to superstores to counterbalance the trimming of its ranges and provide a new path to attracting and retaining new customer.
“However, due to the more costly nature of convenience retailing Asda does not offer the same low prices as it does in larger store formats. Affordability has been a key driver of Asda’s recent growth, with sales of its opening price point Just Essentials range growing 113% year on year and maintaining its position as Which’s most affordable supermarket for four months in a row. Mid-tier and premium range sales have also increased, potentially indicating some growth in the retailer’s popularity with more affluent customers and a greater focus on premium lines in Asda on the Move convenience stores. Another strategy paying off for Asda is its Asda Rewards loyalty scheme, which offers customers rewards in the form of Asda Pounds, and will soon be offering personalised deals and offers. The app has been downloaded 9.7m times and the grocer reports having more than 4.5m active customers. Loyalty schemes have proven to be important for retailers in retaining customers, as well as acquiring data and information to better serve consumer needs.
“Asda’s online grocery service and partnership with Uber Eats are experiencing greater sales as the grocer rivals Sainsbury’s for the number two spot for online grocery. The grocer has a market share over 20% and looks set to grow that number, being well positioned to use its large out-of-town stores as efficient hubs for click & collect and home delivery.”
