Superbrands case studies: Asda
Originally published in 'Consumer Superbrands Volume V', March 2003. The book reviews the UK's strongest consumer brands as judged by an independent judging panel.
Case study provided by Superbrands. URL: www.superbrands.org
Visit Asda's website at www.asda.co.uk
It is 40 years since a couple of Yorkshire brothers opened a small supermarket in the town of Castleford when such stores were in their infancy. Today supermarkets have come of age and grown out of all recognition from their early days in terms of size and range of products. The Big Five alone, which includes Asda, account for combined sales of £62 billion (Source: Mintel 2002).
The twenty first century shopper is more affluent, sophisticated and food conscious with higher expectations and needs than his/her predecessor and willing to experiment with a range of foods and lines which, 40 years ago, were considered not only exotic but also prohibitively expensive, except to the fortunate few.
Food accounts for 16% of the average households weekly outgoings (which is £385) with the majority of the population (50.3%) doing their shopping once a week. A smaller group (14.6%) shop two or three times weekly (Source: Mintel 2002). The rise in the number of homes with fridges, freezers and microwaves, coupled with the growth of car ownership has revolutionised how, when and where we shop. Additionally, in this time conscious age the supermarkets one-stop shop ethos is lost on few consumers. Out-of-town developments have helped remove the headache of congested city-centre shopping for those favouring a more leisurely, family oriented approach to buying everything from their weekly groceries to clothes for the children.
Interestingly, Asda has found that even in a climate of greater economic prosperity, consumers now perceived getting good value for money as a sensible and acceptable thing to do. A cultural shift towards rising aspirations and higher expectations of material well-being is also taking place. This has led to the majority of people aiming towards making their disposable income go further. British shoppers value supermarkets. It is hardly surprising that Asda and the Every Day Low Pricing (EDLP) policy is a firm favourite with shoppers making it the UKs third largest supermarket group.
Asda is the UK's best value food and clothing superstore. Average prices at Asda, which carries out more than eleven million transactions a week offering an unmatchable mix of fresh food, grocery, clothing, home, leisure and entertainment goods, are over 10% lower than competitors. Asda has received countless accolades. For the fifth consecutive year in 2002, it was voted Britain's best value supermarket by The Grocer magazine and the UKs favourite store for range, price, service and reliability in a survey by ACNielsen. Over the years Asda has raised millions for charities as well as being involved with local communities. In 2001 staff raised £3.5 million for local good causes and spent over 67,000 hours undertaking voluntary work. A crowning achievement for such efforts has been the Nestle Social Commitment Award.
As well as looking after its customers and the local community, Asda cares equally for its staff who are known as "colleagues" and suppliers. In 2002 it topped a Sunday Times employee survey -- Britains Top 100 Companies to Work For. Such prizes have been underlined by The Castle Award recognising Asdas commitment to providing equal pay and opportunities for women through innovative working practices ranging from introducing the first supermarket store manager job share scheme at Barnsley in 1999 to the School Starter programme which allows parents to take a half day holiday on their childs first day at school. Asda has also been named top employer by Personnel Today magazine and won awards for its innovative share schemes, 11,000 employees pocketed £14.5 million worth of shares in 2002. Asda places great importance on using local suppliers, working with more than 2,600 and buying £1.1 billion in produce from them annually. Its own Code of Trade Practice, goes farther than the industry standard with special provisions for small and developing suppliers.
Asda came into being in 1965 although its roots are firmly embedded in the Yorkshire dairy business of the 1920s when the Stockdale family operated its own milk wholesaling business.
The Stockdales joined forces with other local farmers and through a process of acquisition and diversification became a public company. Associated Dairies & Farm Stores Ltd was formed in 1949. Enterprising brothers Peter and Fred Asquith joined the company in the 1950s and began developing a supermarket concept. Their first supermarket, aptly named Queens opened at the former Queens Theatre in Castleford, Yorkshire, offering permanent reductions. Two years later the Asquiths opened the third store under the Asda name. The 1970s and 1980s witnessed a period of further growth with the purchase of furniture retailer MFI, Allied Carpets and the Gateway stores chain.
Amid much attention from the press, the US food retailing giant, Wal-Mart, bought Asda for £7 billion in 1999. As part of the Wal-Mart family Asda has retained its identity and remained true to its principles of better value and always backing British farmers and growers. The union has been very successful and Asda has since gained one million new customers. Six thousand price cuts were made in 2000 and the following spring Asda cut shoppers combined grocery bills by a further £52 million.
Asda today has more than 250 stores throughout the UK. It has a flexible approach to store sizes which vary from between 10,000 and 100,000 square feet, aiming to place the right development in the right catchment. The largest units or Supercentres, offer food, general merchandise, clothing and white/brown goods. The superstore is a mini-equivalent of its big brother. Small stores do not come any smaller than Billinghams 8,000 square foot, but are designed to suit the urban commuter who might need a sandwich for lunch or last minute ingredients for that evenings meal.
Its own label brands -- Smart Price, Asda Brand, Good For You! Organic and Extra Special -- are best selling brands in their own right and have been developed to meet specific customer needs. In response to consumer demand Asda implemented a three year pledge to ensure its own label products were healthier reducing fat, sugar and salt levels by 10% and in the process taking out 900 tonnes of salt without compromising on price, quality or shelf-life. The initiative includes removing allergenic ingredients like gluten and milk and lowering levels of additives linked to hypersensitivity in children. Asda has been at the forefront of developing in-store food-to-go counters introducing Curry Pot in 1996. This success prompted the superstore to launch Tex-Mex, Chinese, fish and chips and rotisserie chicken ranges.
In striving to serve all customers Asda has been truly innovative. Schemes for the disabled range from using Braille guns to label tinned goods, electric shopping scooters and trolley-vators which lift shoppers to the higher shelves. The UKs first multi-lingual superstore in Bradford featured customer signage in Urdu, Punjabi and English. The brands online home shopping service, asda.com, launched in 1998 and is operational in more than 30 stores throughout the UK with coverage constantly growing. The service offers a range of more than 11,000 products delivered to customers in temperature-controlled vans. Asda offers competitively priced online travel and pet insurance, whilst its Calltime programme offers an alternative service to BT with reduced-rate phone calls.
Asda works constantly to improve product and services while delivering its promise of Every Day Low Prices (EDLP). It has embarked on a multi-million pound review of its own label business which accounts for just over half of total sales. In true Asda style the review has resulted in reducing prices while increasing volume. In 2002 alone the meat, fish and poultry section alone witnessed a £750,000 investment in rolling back prices.
Asda also continues to drive down non- food prices. In May 2001 the superstore was victorious in its six-year campaign to abolish retail price maintenance (RPM) for over the counter (OTC) medicines. The campaign ended a practice which meant consumers were paying in excess of £300 million on OTC branded products annually. Asda celebrated by cutting prices by 50% on 36 healthcare items. In endeavouring to maintain lower prices whilst retaining quality, Asda broke the Net Book agreement and bought better value books and reduced the price of comics.
Asda has relaunched its general merchandise departments with 5,000 new lines delivering previously unheard of prices in the UK with toasters, kettles and irons under £8 and microwaves for less than £40. In parallel it expanded into new speciality areas like opticians, pharmacies, jewellery and photo departments, the latter offering prices 30% less than the high street. By the end of 2002 Asda was the UKs sixth largest chain of opticians and ready to accelerate its pharmacy development, should it win its battle to relax the UK pharmacy opening controls.
The George clothing range which now encompasses everything from babyware to beachware launched in only five stores in 1990 has grown to a £600 million business and is the UK's second biggest fashion retailer. George Essentials launched in 2001 with prices averaging 30% lower than standard ranges with no compromise on quality. George Fast Fashion appeared the following April. It captures the latest styles and trends as they come off the catwalk with a brief to produce clothes from design to store in only seven weeks. The ranges are refreshed every four weeks reflecting the growing desire of shoppers to be inspired by new and fresh fashion items every time they shop.
Asda has invested heavily in promotional and advertising activity spending £18 million annually on television alone. Commercials which underscore Asda's great value use the "pocket the difference" tagline while featuring ordinary shoppers and staff in every day situations.
A variety of in-store publications -- Asda Price News, George Magalogues and Asda Magazine -- keep customers informed of new products while broadening their understanding of the non-food range. Asda Magazine, with a readership of five million is the UK's most popular women's monthly. Asda has also made clever use of below the line advertising using rickshaws to publicise the launch of its Dewsbury store.
As part of its promotional strategy the superstore has run a variety of entertainments or "retailments" for customers. These included drive-in movies, fireworks parties and skating nights. Asda was a key sponsor of the 2001 Commonwealth Games and part of its commitment to the regeneration of Manchester was the opening of a superstore.
Asda is a people focused company with a caring nature. Central to the brands personality is its aim to maintain a genuine interest in what customers think and feel so it can be prepared to do the best for them. Asda hopes to be perceived as consistent and trustworthy and present customers with an offer where they can expect low prices whenever they shop and whatever they shop for whilst ensuring quality is not sacrificed.
Things you didn't know
© 2003 Superbrands Ltd
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