When Andy Bond, chief executive officer of U.K.-based Asda, delivered the 2007 results to the media late last year, he described it as a “vintage year” with the company achieving all its targets in terms of sales and profitability.
“We've grown faster than all our competitors on total sales and like-for-like sales … with 2 million new customers added since 2006. We're in very good health with a strong base for future growth,” he stated.
The numbers showed Asda had delivered like-for-like sales growth (excluding gasoline) in the “mid-single digits,” and in the “high single digits” for overall sales over the past 12 months.
This represents something of a turnaround as the company had been losing ground to its major rival Tesco, which had been fighting it aggressively on price and relying heavily on clever promotional activity to further stimulate sales.
“For two to three years, it wasn't working as well as it could have been,” said Bryan Roberts, global retail research manager at PlanetRetail in London. “Asda had taken its eye off the ball on customer service and general housekeeping. It is noticeable now that there is more staff in-store and the stores are tidier. They've also focused on price and private label and are slowly winning around middle-class shoppers.”
The 350-store company has also been much more return-on-investment-focused on its experimental formats, which led to the axing of its Essentials stores that stocked predominantly own-label products, and its standalone George clothing outlets.
Bond confidently talked about future growth prospects and was keen to dispel the belief of many people in the retail industry that the U.K. planning restrictions on building out-of-town big-box superstores were hampering its ability to add square footage. He revealed that the company has in fact accounted for 26% of total new retail space opened in the U.K. since 2002. This will continue as the company plans to add 10-12 new superstores, 10 new Living stores and build extensions on 12 existing outlets during 2008.
Store development is being undertaken in conjunction with the accelerated rollout of Asda's Internet home shopping service to another 40 stores, which will provide delivery coverage for 95% of U.K. postal codes compared with a current 75%. Its e-commerce model is currently being overhauled and will be rolled out to other WMI operations when complete.
One area that still requires rejuvenation is the George apparel line that Bond admitted had become too focused on younger, fashion-conscious shoppers. This is currently being addressed. “We're reestablishing the product offer that's relevant to the core family shopper of middle-income 30-to-45-year-old women with kids,” he stated.