Asda is accelerating development of its multi-channel business with investment in click and collect for food and general merchandise and same day delivery on grocery home shopping.
Announcing a 4.5% uplift in total sales, including petrol, to £22.8bn for 2012 – up from £21.8bn in 2011, Asda said it is investing over £700m of capital in 2013 into online, new and existing stores and its supply chain to support the move.
Andy Clarke, president and CEO of Asda said: “I’m proud that in the continuing and very challenging trading environment we were able to increase total sales by 4.5% last year. This shows that we are continuing to get it right for customers.
“By focusing on their needs through accelerating our investment in the technology and infrastructure to make shopping more convenient, customers can shop for what they want, when they want it.”
Asda said it is recording double-digit year-on-year growth and increased demand from customers shopping online. In response, it has increased its home shopping capacity with the opening of a third purpose-built picking centre in Nottingham last month (March).
The 120,000sq ft centre is reported to have the appearance of ‘a store without customers’. It includes a team of bakers preparing fresh bread from 4am, a home-baked pizza counter producing bespoke pizzas; as well as offering customers extended delivery slots between 6am and 11pm and access to a product range of more than 25,000 items, ranging from fresh fish to local suppliers.
Asda is also taking its first steps into the wholesale market by offering local businesses a trade rate on deliveries.
Asda said it is investing in click and collect facilities for George clothing and general merchandise in all of its 568 stores and customers will be able to collect grocery shopping from almost 200 outlets by the end of 2013, including from stores and lockers at Asda petrol stations.
This is in addition to the Collect Plus deal announced in March, where customers can buy George and Asda Direct items online and collect or return them at more than 5,000 convenience stores and petrol stations in the UK.
Asda said performance in the grocery click and collect business is outperforming expectations, with the format now accounting for 4% of all grocery home shopping orders since launch in Autumn 2012. A new ‘drive thru’ click and collect facility in York is described as a world first – combining food and non-food collection orders in one place meaning a customer can pick up a barbeque alongside bananas, without leaving their car.
More innovation around click and collect, where customers can order online and collect from a store, is planned for the remainder of 2013, including ‘same day’ delivery on food grocery orders, another world first, according to Asda.
Commenting on the moves, Chris Gates, director of retail at Hitachi Consulting UK, said: “Introducing same day delivery and innovating with click and collect initiatives is a bold attempt by Asda to get ahead of the market.
“In the UK, we have already witnessed the success retailers have experienced by fusing the online channels with a traditional bricks-and-mortar presence. For example, John Lewis has invested heavily in its collect-in-store scheme and 40% of online orders are now collected in either a John Lewis or Waitrose store – saving on both delivery charges and driving footfall in-store where the company has an additional opportunity to upsell. In addition, Tesco has led the way in developing their integrated multi-channel operations, of which click and collect is a core part, targeting £5.5bn in online grocery revenue by 2017.
“Given the critical importance of click and collect schemes, we expect to see more retailers to introduce similar facilities that centre the customer experience around convenience and instant fulfilment.
“Moving forwards, a key challenge for brands will be connecting existing channels and systems so stores have an accurate view of stock and are confident they can fulfil orders placed online. In order to remain competitive in an omni-channel world, retailers must ensure they follow in the footsteps of Asda by enabling stores to act as fulfilment centres. This approach will help minimise the supply-chain costs associated with same-day delivery and click-and-collect schemes whilst boosting customer satisfaction.”
In the remainder of the 2103, Asda will also open 10 new stores, including four new small format supermarkets, five superstores and one new non-food outlet. This is in addition to two stores already opened in 2013 in Coventry (Asda Living) and Larkhall, near Glasgow (Asda supermarket). The total new stores will together add over 340,000sq ft of net selling space in 2013.
Asda’s multi-channel investment news comes ahead of the publication of its Q1 results on 16 May 2013.