Middle class bargain hunters boost sales at Asda

2008/11/14

Asda said that an increase in visits by wealthy shoppers was behind a strong third-quarter sales performance at the chain. The UK’s second biggest supermarket said that like-for-like sales over its third-quarter rose by 6.9%, excluding petrol. The figure compares to recent growth of 3.9% at Sainsbury’s and 3.7% at Tesco.

Asda’s latest quarterly growth to 30 September compared to 6% in Q2 and 5% in Q1 as sales continued to be driven by a combination of increased customer numbers (in particular AB shoppers) and higher basket spend. Figures published this week by TNS showed that Asda is growing twice as fast as the UK market. In a trading statement, Asda said that at a time when customers are increasingly price conscious, Asda continues to drive its low cost agenda enabling it to fund lower prices for customers. As a result it has further strengthened its price advantage over its competitors. The Wal-Mart-owned supermarket added that profit grew ahead of target with good cost control despite rising energy costs.

In food, Asda said it has invested £30m in improving product quality with blind taste tests showing its own-label products out-performing comparable products from premium-led retailers. This it said was one of the initiatives that resulted in strong food sales in the quarter particularly in fresh meat, chilled food and wine, satisfying the demand of higher demographic customers.

In general merchandise, Asda said it has outperformed all major general merchandise retailers over this period, with the strongest growth in Baby, Music, Video and Games. ASDA also had its best ever Halloween performance. The Asda Mobile network also grew rapidly as the company launched one of the UK’s lowest pay-as-you-go mobile tariff.

At George, sales were said to have outperformed a difficult market, with group gaining share from its high street rivals (TNS World panel – 24 weeks to 14 September). This year George has simplified its ranges, improved product quality and bought higher volumes of iconic products like the £15 winter coat, £35 tuxedo and £12 little black party dress. George also launched its new marketing campaign this quarter focusing on using real people not highly paid celebrities.

Online, Asda continued the rollout of its home shopping service, which now covers more than 90% of the UK population and is the UK’s second biggest food home shopping business. To meet demand this Christmas Asda has increased the number of delivery slots by 40% compared to 2007. The supermarket also recently launched Asda Direct, offering non food products to on-line shoppers across the UK.

Asda has opened fifteen new stores so far this year, including four new ASDA Living stores, with a further six stores due to open in 2008.

Asda CFO, Judith McKenna commented, "This is another strong set of numbers. We have continued to grow volume and gain market share each quarter this year by focusing on giving our customers great quality and outstanding value at a time when they need them most. Our strategy of being the lowest cost to operate supermarket is the right one, and is helping us drive down prices.

"We are absolutely committed to making life easier for hard-pressed shoppers. We will continue to offer outstanding value for money across our entire range of food, general merchandise and clothing. As a result I am confident our stores are well set up to enable customers to have the best possible Christmas." (source:Namnews)