Asda Wins Market Share as Customer Numbers Reach Record High

Asda’s view of the wider economic outlook continues to be cautious. Despite Asda’s latest income tracker (July 2009) revealing that on average families are £12 a week better off than a year ago, UK consumer confidence remains low, driven by concerns about job security.

14 Aug 2009 UK retailer Asda has continued to grow its market share, through increased sales volumes. This growth has been driven by attracting more customers by lowering prices and improving product quality.

As a result of its aggressive cost reduction programme, the supermarket is also growing its profit ahead of sales, whilst still extending its price gap to the market. It has maintained its price leadership each week since the start of the year, according to the independent price checker mysupermarket.co.uk. In addition, in June, Asda won The Grocer magazine’s lowest priced supermarket award for a 12th successive year, by a record margin.

Underlying comp sales, excluding fuel, grew by 7.2 per cent, after adjusting for Easter (unadjusted comp sales growth was 7.9 per cent).

Asda’s market share increased to 17.0 per cent, up from 16.7 per cent in the same quarter last year according to TNS Till Roll (12 weeks to 12th July 2009), with food, home and leisure and George all out-performing their respective markets. There was a sharp fall in food price inflation over the quarter, which is now at its lowest level for two years. However, Asda saw its food volumes accelerate over the same period as the supermarket continued to win customers.

Judith McKenna, Asda’s chief financial officer said: “We’re pleased with these results as they demonstrate the ongoing health of our business. By continuing to be the lowest price retailer and by broadening our appeal, we’re attracting more customers, and increasing our sales volumes.

“Our food business continues to outperform, our home and leisure business has also strengthened, and George clothing has had an excellent Spring/Summer season. Early sales of our George Back to School range, with its unique 100 day quality guarantee, have also been extremely encouraging.”

Asda has opened ten stores so far this year, which are performing ahead of expectations. This includes three recently acquired smaller stores from the Co-op in Lancing, Pershore and Wellington, which opened earlier this week. As a result, Asda is on target to create the 7,000 new jobs it promised by the end of the year.

The supermarket continues to develop its grocery home shopping business as one of its key growth channels. Grocery sales through Asda.com are growing rapidly, supported by the launch of a new web platform developed jointly by Asda and Walmart International. The new enhanced website brings the Asda in-store experience alive online giving customers a more natural shopping experience, better descriptions and clearer product images, as well as speeding up checkout times.

In July, to support grocery home shopping, Asda also opened a new dedicated picking centre in Morley, Leeds, creating 200 jobs. The 50,000 sq ft centre is split over two levels and serves customers across West Yorkshire, replacing the service previously operated by five local Asda stores. As a result the long-term capacity for delivery slots in the area has increased four-fold.

In addition the Asda Direct business continues to grow strongly; customers can select from around 750,000 non food products including the full George clothing range, and a number of leading brands such as Hotpoint, Sony, Apple, Nintendo and Dyson. Customer satisfaction levels are extremely high, with customers rating the quality of service and value for money they received during the quarter at 4.1 out of 5.

Asda’s view of the wider economic outlook continues to be cautious. Despite Asda’s latest income tracker (July 2009) revealing that on average families are £12 a week better off than a year ago, UK consumer confidence remains low, driven by concerns about job security.

Judith McKenna added: “Consumers continue to be somewhat cautious, with many people choosing to use any extra money they have to pay down debt and save more. This is not going to be a straight line economic recovery, however, in this environment, we are well placed to continue gaining market share by giving customers what they want – great products at low prices.”