Asda faces clash with Waitrose as it launches ‘Just Essentials’ range
Asda is set to invest £45m in the new budget range, as it seeks to regain its position as the UK’s second largest supermarket by market share.
Asda has confirmed it is launching a new value range, Just Essentials by Asda, which it claims is the largest budget-friendly staples offer in the market.
The supermarket has invested £45m in developing the range and says it has been specifically designed to help “millions of families” manage rising living costs. It comprises 300 products, 50% more than Asda’s Smart Price range, which it will eventually replace.
Products will arrive in-store from May and will be rolled out across the summer. The range will span key categories such as fresh meat, fish and poultry, bakery, frozen and cupboard staples, as well as more than 20 essential household and toiletry products.
According to Asda, the Just Essentials range will “further strengthen” the grocer’s position as the “lowest-priced” big four supermarket.
However, the supermarket now faces a legal challenge from rival Waitrose, which has had its own budget range Essential Waitrose since 2009.
Waitrose sent a legal letter to Asda yesterday (28 March), with a spokesperson for the supermarket saying it is “surprised” to hear Asda is launching an essentials range with a similar name. Waitrose claims its own Essentials brand has built up a “strong reputation for value, quality and higher welfare standards” since launch, with the supermarket adding its range is “protected” by trademark.
Our ambition is for Asda to regain its position as the UK’s second largest grocery retailer.
Mohsin Issa, Asda
Responding to the challenge from Waitrose, an Asda spokesperson says: “The word ‘essentials’ is a generic and commonly used term by retailers to describe their value product ranges”.
Asda confirmed the launch of Just Essentials as it delivered a trading update covering the fourth quarter and financial year ending 31 December. Like-for-like sales were down 2.9% compared to the same quarter in 2020, but remain up 2.6% on a two-year basis.
In the fourth quarter of 2021, Asda saw particular success with its premium range, as consumers splashed out for Christmas. Sales of the Extra Special range increased by 28% compared to Q4 2020. Asda says this makes it the fastest growing premium supermarket own-label brand.
Across 2021, total sales increased by 0.5% to £20.4bn compared to 2020. However, grocery sales dropped by 0.5% over the same period, which Asda says is down to the fact people were eating more meals at home in 2020 due to the pandemic. The supermarket has reported an increase in like-for-like grocery sales of 4.6% compared to two years ago.
Asda switches slogans to focus on wider brand experience
“When we bought Asda we were clear that we wanted to grow this great business and our ambition is for Asda to regain its position as the UK’s second largest grocery retailer,” says co-owner Mohsin Issa.
“We are pleased with the progress made in the six months since we officially took over the business and are confident we can achieve this long-term ambition by providing customers with exceptional value wherever and however they choose to shop with us.”
Online purchases were also hit by easing restrictions, falling by 5% in 2021 compared to 2020. However, online sales remain 75% above what they were in 2019. In December 2021, Asda hit its target to create 1 million delivery slots in the week before Christmas.
The supermarket is now partnering with personal shopper service Buymie to introduce rapid delivery for its customers. Asda is trialling an app called ‘Asda Express Powered by Buymie’, which allows consumers to order on the app and receive their shopping in as little as an hour.
Operating profit grew significantly in 2021, rising by 42% to £693.1m. Asda attributes this growth to a reduction in Covid-related costs, such as measures introduced to meet staff shortages. In 2020, 15,000 of its staff were shielding on full-pay for 12 weeks, and 22,000 temporary staff were hired. Asda also made 2.6 million home grocery deliveries to shielding customers for free.
Asda stepped up its investment in convenience stores last year, with the launch of 31 On the Move shops in partnership with petrol station forecourt operator EG Group, which is also owned by the Issa Brothers. The plan is for Asda On the Move stores to be rolled out to all EG Group sites in the UK.
Asda and EG Group have also introduced brands such as Leon, Cinnabon and Sbarro to 17 stores, with the aim of pushing this to 100 locations by the end of 2022.
Elsewhere, Asda has launched ‘Nurture’, a new initiative designed to give emerging brands their first listing in a big four supermarket. As part of the programme, Asda will stock 46 products from 15 small brands stocked across 100 stores.
Some of these products will be exclusive to Asda and the brands involved will also receive mentorship on how to work with large retailers and reach more customers.
As well as stocking more smaller brands, Asda says it will continue to form partnerships to “help customers fulfil multiple shopping missions”. Over the past year and a half, Asda has partnered with more than 40 different brands, and will now roll out “the most successful partnerships which are ready to scale”.