Asda credits ‘consistent’ price message as sales growth accelerates

Asda has hailed the supermarket’s price transparency and consistent messaging for helping it outperform rivals in a challenging second quarter that saw the grocery market fall to its lowest growth in 10 years.

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The supermarket says sales for the quarter ending 30 June were up 0.5 per cent on a like-for-like basis. That is an improvement on the 0.1 per cent growth posted in the last year and helped it increase its share of the grocery market to 18.4 per cent.

Asda claims its strong price positioning against Tesco, Sainsbury’s and Morrisons and its value proposition helped it grow sales ahead of the market, with positive like-for-likes across its food, general merchandise and clothing businesses. Online sales also performed strongly, again outperforming the market with a 20 per cent year-on-year rise.

Asda chief executive Andy Clarke, speaking at an event in London to announce the results, said he was “pleased” with the results given how challenging the quarter has been as the supermarket attempts to react to structural changes including the rise of discounters and online shopping and the move away from big weekly supermarket shops.

He claimed the supermarket’s decision to move away from “pricing gimmicks” and vouchering more than a year ago to focus on every day low price is paying off as mobile technology makes pricing transparency more important than ever.

Stephen Smith, chief customer officer at Asda, tells Marketing Week that having no gimmicks and low prices also help to drive loyalty. He claims Asda is some way ahead of its rivals on this having launched its “Price Lock” marketing message 18 months ago.

“Everyone else is obfuscating their value to customers with ‘Price Promise’, ‘Brand Match’, all kinds of gimmicks. Customers are exhausted by that and so these gimmicks have collapsed. They don’t trust the retailers and the gimmicks. We are simply investing in having the lowest prices week in week out,” he adds.

He also credits Asda’s “consistency” both across its marketing and the whole customer experience. Smith says his new role, which he took over earlier this year, is aimed at developing a single customer promise and experience across stores, online and communications.

“The authority that the customer has throughout the business has changed because ‘customer’ is in my title and there is the expectation that all insights and all principles are coming out of one organisation. It has allowed us to be really consistent,” he says.

Clive Black, analyst at Shore Capital, says Asda is reaping the benefits of “smelling the coffee” first and prioritising pricing over promotions. However he cautions that the others are now following, making for a “potentially even more challenging industry”.

Clarke says Asda will not rest on its laurels with plans to continue to accelerate in online particularly by introducing more click and collect points and trialling new formats. This includes plans to open 100 standalone petrol stations following a small number of successful test sites with the supermarket on the lookout for locations to acquire.

There are also plans to overhaul its larger stores with trials expected in the fourth quarter of this year. While Clarke would not say what that would involve, he did say Asda is in discussions with a number of partners after opening Subway concessions in a number of stores.

“The world used to be about super stores, now it’s about super destinations,” he said.

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