Asda to develop smaller format stores and online sales

Asda in smaller store push

Asda is expanding into the convenience market with plans for a range of smaller format stores.

The Wal-Mart-owned supermarket, is also developing its non-food, Asda Living store portfolio and its online business to reach more customers.

Announcing Asda’s 2009 results, chief executive Andy Bond, said: “It’s time to open a new chapter for Asda.

“As part of our strategy to broaden and accelerate our business, you will see us making progress in a number of areas. Through a combination of new formats – both smaller supermarkets to meet the needs of local communities, and through Asda Living, we will broaden our business reaching more customers in markets that are currently under served by Asda.”

Bond said last year Asda had created a separate division for 21 of its smaller stores, all of which are under 25,000sq ft.

“This is allowing us to focus much more clearly on the needs of shoppers in those locations, ensuring the range and offer is right,” he said.

Asda also acquired three smaller, former Co-operative stores, which range from 10,000-17,000sq ft.

“Despite being small Asda stores, customers tell us they are able to do a full weekly shop. I’m confident we have a model that we can now accelerate in this market,” he said.

Bond said Asda Living continued to exceed expectations.

“In its own right our Living format is now a bigger non-food business than a number of high profile brands,” he said. “We are very well placed to accelerate when the environment for out-of -town retail improves.”

According to Bond, Asda had a great year in 2009.

“We made tremendous progress achieving our highest ever market share and we grew our profit ahead of sales,” he said.

Like-for-like sales, excluding fuel, increased by 6% for the full year; and 4.6% for the fourth quarter, when sales were impacted by the snow.

Asda’s top performing stores by country were Asda Rayleigh (England), Asda Enniskillen (Northern Ireland), Asda Girvan (Scotland) and Asda Pwllheli (Wales).

Asda is also growing its online business – grocery home shopping and Asda Direct.

Bond said grocery home shopping business increased by nearly 50% last year and Asda now has over 97% coverage across the UK.

“This will be another big growth driver for us, and we are well placed to capture market share from all of our online competitors,” he said.

A home shopping picking centre trial in Morley has been a success, said Bond, and Asda is searching for more locations to locate new centres.

“We intend to open these in places that are not adequately served by Asda stores,” he said.

Asda Direct has grown via strong home and leisure sales and clothing, said Bond.

Both its online websites are supported through an Instore Collect service, which will be available nationwide from next month (March).

“Allowing customers to purchase a full range online then have the product delivered to their home or local store for collection is a real opportunity for us,” said Bond.

He said Asda is aiming for at least 10% of George sales to come from online purchases.