| Type | Private company subsidiary |
|---|---|
| Industry | Retail |
| Founded | Leeds, West Riding of Yorkshire, England (1965) |
| Headquarters | Asda House, Leeds, West Yorkshire, United Kingdom |
| Number of locations | 523 (as of August 2011) |
| Key people | Andy Clarke (CEO/President) Judith McKenna (COO) |
| Products | Grocery, General merchandise, financial services |
| Revenue | see Wal-Mart Stores, Inc. |
| Operating income | £638 million |
| Employees | 143,126 |
| Parent | Walmart |
| Website | www.asda.co.uk |
Asda Stores Ltd. is a British supermarket chain which retails food, clothing, general merchandise, toys and financial services. It also has a mobile telephone network, (via the Vodafone Network), Asda Mobile. Its head office is at Asda House in Leeds, West Yorkshire.[1]
Asda became a subsidiary of the American retail giant Walmart, the world’s largest retailer,[2] in 1999,[3] and is the UK's second largest chain by market share after Tesco.[4] In December 2010, Asda's share of the UK grocery market stood at 16.5%.[5]
Asda's marketing promotions are usually based solely on price, with Asda promoting itself under the slogan Britain's Lowest Priced Supermarket, 14 Years Running. As a wholly owned division of Wal-Mart, Asda is not required to declare quarterly or half-yearly earnings. It submits full accounts to Companies House each October.
Asda Stores Limited was founded as Associated Dairies & Farm Stores Limited in 1949 in Leeds. The adoption of the Asda name occurred in 1965 with the merger of the Asquith chain of three supermarkets and Associated Dairies; Asda is an abbreviation of Asquith and Dairies, often capitalised.[6] For a short time in the 1980s Asda Stores Ltd was a subsidiary of Asda-MFI plc following a merger between the two companies. Other companies in the group were Associated Dairies Limited, the furniture retailer MFI and Allied Carpets. After the sale of MFI and Allied Carpets the company name changed to Asda Group plc. The dairy division was sold in a management buyout and renamed Associated Fresh Foods,[7] meaning that Asda has since had no connection with one of the firms its name was derived from.
With stores mainly based in the North of England, the newly focused food retail group expanded further south in 1989 by buying the large format stores of rival Gateway Superstores for £705 million. This move overstretched the company and it found itself in trouble trying to sell too many different products.[8] As a result it was forced to raise money from shareholders in both 1991 and 1993. It revived under the leadership of Archie Norman, who later became a front bench Conservative MP. CEO from 1991, Norman was chairman of the company during the period 1996–99, and replicated the store on the basis of United States retail giant Wal-Mart, even sending protégé Allan Leighton to Bentonville, Arkansas to assess and photograph the systems and marketing which Wal-Mart had deployed.[9]
In 1997, the Spice Girls licensed their name and image to Asda in which they created over 40 different Spice Items for Christmas 1997 developing goods such as party supplies, official merchandise, and even Spice Girl branded kids meals in the stores' restaurants. The Spice Girls earned £1 million for this sponsorship deal.
When Norman left the company to pursue his political career, he was replaced by Leighton. Wal-Mart wanted to enter the UK market so CEO Bob Martin lobbied British Prime Minister Tony Blair on planning issues.[10] Asda, which at the time owned 230 stores and had planned to merge with Kingfisher plc, was purchased by Wal-Mart on 26 July 1999 for £6.7 billion.[3]
After the takeover Asda continued to maintain its headquarters at the then newly opened "Asda House". This building was one of the first of the new large office blocks to open as part of the redevelopment of the huge area south of the River Aire in Leeds city centre, in the Holbeck district, West Yorkshire.
In 2005, amid reported concerns within Wal-Mart about a slippage in market share, partially due to a resurgent Sainsbury's, Asda's chief executive, Tony de Nunzio left, and was replaced by Andy Bond. In 2005, Asda expanded into Northern Ireland by purchasing 12 Safeway stores from Morrisons.[11][12]
In November 2008 there were reports that Asda was to buy Irish retailer Dunnes.[13]
In 2009 Wal-Mart 'sold' Asda for £6.9 billion to their Leeds-based investment subsidiary Corinth Services Limited.[14] The deal, which took place in August, was described as part of a “group restructuring” and means Asda remains under the control of the Wal-Mart, since Corinth are themselves a subsidiary of Wal-Mart.[15]
On 11 May 2010 Andy Clarke, a former manager of an Asda store, who was also the Chief Operating Officer, was appointed as Chief Executive Officer.[16]
In May 2010, it was announced that Asda would buy all of Netto's UK Operations in a £778 million deal. The deal will see Asda move into the smaller, more localised store market with most Netto stores being only one fifth the size of the average Asda supermarket. In September 2010 it was announced that Asda will be forced to sell 47 of the existing 194 Netto stores due to a ruling by the Office of Fair Trading. The rebranding of Netto stores to Asda began in early 2011.[17]
In February 2011, Asda announced the purchase of 6 stores from Focus DIY, which will be converted into supermarkets subject to approvals and local planning consents.[18]
Asda is known for memorable famous marketing campaigns. In the "Asda price" campaign,[19] customers tap their trouser pocket twice, producing a 'chinking' sound as the coins that Asda's low prices have supposedly left in their pockets knock together. The pocket tap ads were launched in 1977 and over the next 30 years a range of celebrities have been "tappers", including Julie Walters, Michael Owen, sitcom actor Leonard Rossiter and Carry On actress Hattie Jacques.[20] In the late 1980s and early 1990s, prior to the reintroduction of the tap pocket campaign, advertising for Asda had featured the Fairground Attraction song Perfect. In 2004, Sharon Osbourne was selected to be part of a new marketing campaign by Asda; her last advert was aired in August 2005.
From 1990 to 1992, they were the sponsors of Sheffield Wednesday F.C. during arguably their two most successful seasons in modern times – when they won promotion from the Football League Second Division as Football League Cup winners and finished third in the Football League First Division (last season before the creation of the FA Premier League).
In the smiley face "rollback" campaign, also used in Wal-Mart advertisements, a CGI smiley face bounced from price tag to price tag, knocking them down as customers watch. The focus of these campaigns is to portray Asda as the most affordable supermarket in the country, a claim that was challenged by competitors, especially Aldi. In 2006, Asda advertising was themed around singing children and the slogan "More for you for less", and the previous tap of the trouser pocket advertising was reduced to a double-tap on a stylised 'A', still producing the 'chinking' sound. This included an advert during the 2006 FIFA World Cup featuring the England football player Michael Owen in an advert with the children singing Vindaloo. In 2007, the advertising campaign abandoned the rollback hook in favour of featuring celebrities including Victoria Wood and Paul Whitehouse working as Asda employees.
For Christmas 2007, Asda reintroduced the "That's Asda price" slogan[21] as well as the famous 'jingle' to some of its adverts, this can also be heard on its in-store radio station 'Asda FM'.
Starting in 2008, Asda has been returning to its roots and is now re-focusing on price with its new "Why Pay More?" campaign both on TV and in stores. Current Asda TV commercials in April 2009 focus on price comparisons between Asda and its rivals, using information from "MySupermarket" to suggest that Asda is Britain's most affordable supermarket. The music being used in these adverts is the Billy Childish version of the classic Dad's Army theme tune. The old Asda jingle is not included in these,[22] but appeared in a 2008 Christmas advert.[23] Asda returned to the traditional pocket tap adverts in March/April 2009, with the slogan "Saving You Money Every Day!"
Asda has been winner of The Grocer magazine "Lowest Price Supermarket" Award for the past 12 years,[24] and uses this to promote itself across the UK. In August 2005, rival supermarket chain Tesco challenged Asda's ability to use the claim that it was the cheapest supermarket in the country, by complaining to the Advertising Standards Agency. The A.S.A upheld the complaint[25] and ordered Asda to stop using it, citing that The Grocer magazine survey was based on limited and unrepresentative evidence as it examined the price of just 33 products, and that the survey did not study low-cost supermarkets such as Aldi, and that their price checker, My Supermarket, doesn't include Morrisons, which was mentioned a few times. As a result Asda no longer cites itself as "Officially Britain's lowest priced supermarket", instead using "Winner: Britain's lowest price supermarket award".
Through out the year, Asda has asked pricing strategics company Skuuudle to assist them in their campaign against rivals Argos for the Christmas season to produce price listings so shoppers can see transparent pricing on children's toys on the key Christmas lines, helping people save money though out the season.
Asda was the top performing supermarket in the CRC Energy Efficiency Scheme Performance League Table, coming in at 37 and beating Morrisons at 56, Tesco at 93, and Sainsburys at 164[26].
Asda has signed up to the Ethical Trading Initiative (ETI) which respects workers' rights for freedom of association and a living wage. Implementing this initiative is difficult, however, because the concept of a living wage varies between countries and the buying strategies of a major importer like Asda have an indirect impact on national minimum wages by obliging governments to set them low enough to stop businesses from going elsewhere.[27] Industry pressure groups such as Labour Behind the Label and War on Want have argued that Asda and other budget retailers use unethical labour practices in the developing world to keep UK prices low.[28][29] The National Farmers' Union, representing UK farmers and growers, has argued that Asda and other major supermarkets have made large profits and kept consumer prices low "by squeezing suppliers' margins to the point where many of them have gone out of business".[30]
More recently, Asda's Valentine's Day roses, sold at £2 for a dozen, were said to be ethically sourced by the supermarket. This claim went against research carried out by War on Want.[31]
In October 2010, Chairman Andy Bond was a signatory to a controversial letter to The Daily Telegraph[33] which claimed that "The private sector should be more than capable of generating additional jobs to replace those lost in the public sector, and the redeployment of people to more productive activities will improve economic performance, so generating more employment opportunities." This prompted calls for a boycott of Asda, as well as the companies represented by the other signatories to the letter on the grounds that "Companies that support the CSR are failed corporate citizens.".[34]
Asda Smart Price is a no-frills private label trade name. The equivalents from the three other big supermarkets are Tesco Value, Sainsbury's Basics and Morrisons Bettabuy range,which has now changed to Morrisons Value range.
The Smart Price brand can trace its origins to Asda's Farm Stores brand launched in the mid 1990s, which consisted of products that were offered at a lower price than the equivalent famous name brand product and Asda's own brand equivalent. The Farm Stores brand originally consisted of a small number of food only products, largely frozen such as frozen chips and a small range of ready meals, this range later expanded to include fresh food.
Smart Price products are almost always the lowest price option (known as Our Lowest Price) in a product category in Asda stores. Occasionally this difference is only a few pence, however in others it is a marked difference. For example, a box of Smart Price Biological Washing Powder costs 50 pence while the equivalent Asda brand washing powder costs £1.50 and well known name brand alternatives cost from £2 upwards.
The Smart Price label was originally a food only brand, however over the years it has expanded to cover almost every product range in the store, including clothing and furnishings with the George Smart Price brand. Like early generic products in the US some Smart Price products lack what can be thought of as 'frills' in the modern brand name or supermarket own brand, for example the Smart Price toothpaste has an old fashioned screw cap rather than the now more common flip cap and the Smart Price range of crisps come in traditional clear plastic bags rather than the foil bags common to most name brand versions.
Asda has its own range of clothing known as George which was created in 1990.[35] This is marketed as quality fashion clothing at affordable prices. Wal-Mart also sells the George brand in the United States, Canada and Japan (and in South Korea until Wal-Mart pulled out of that market). This George label was named after George Davies, the founder of Next, who was its original chief designer. He is no longer associated with the brand, although it has aimed to remain true to the high quality, low price business model that he established.
In 2005, Asda stated that the George range was a £1.75 billion business, including sales from Wal-Mart stores in the USA and Germany. Mintel estimate that George is the fourth largest retailer of clothing in the United Kingdom, after Marks & Spencer, the Arcadia Group and Next.[36]
Asda was the first supermarket to stock wedding dresses. Part of the George line, they cost just £60 while adult bridesmaid dresses ranged between £30 and £35, at launch.[37]
Asda originally had a "simple and fresh" store format, which under Archie Norman's team and the focus on a Wal-Mart style strategy became even more emphasised. The stores are generally white and green, with simplistic layout but built on a Wal-Mart larger footprint format – Asda's average store is almost 20% bigger than its rivals, but stocks 20% fewer lines.
However, the preferred large-format stores have brought problems to Asda's growth beyond its spurts in both the 1990s and immediate post Wal-Mart era. With the UK's tight planning restrictions, the opportunity to increase retail space via new store builds has been limited. Rather than follow rivals Tesco and Sainsbury's into "local" format smaller-footprint stores, Asda has chosen to adapt its format to niche stores to retain longer term growth.
On 16 April 2010, Asda announced plans to open over 100 new non-food stores as part of an ambitious five-year plan.[38]
In February 2011, Asda announced the purchase of 6 stores from Focus DIY, which will be converted into supermarkets subject to approvals and local planning consents.[18]
Following the takeover by Wal-Mart, several "Asda Wal-Mart Supercentres" have been opened, creating some of the largest hypermarkets in the United Kingdom. The first Supercentre opened in Livingston, Scotland in June 2000. The Minworth, Birmingham store is currently the largest Asda Supercentre with a nett sales floor of over 120,000sqft.[39] The Milton Keynes store is currently the second largest Asda Wal-Mart Supercentre and the third largest is located in Huyton, Merseyside. There are currently 25 Supercentres in the UK.
Asda superstores
Asda superstores are large supermarkets with a non food offer slightly smaller than a Asda Supercentre. As of 2011 there are 231 superstores in the UK.
The Supermarket division was formed in 2009. As of July 2010, there are 26 small format supermarkets some of which were acquired from the Co-operative. The first three acquisition stores opened mid 2009 in Wellington, Lancing and Pershore followed by Cumnock, Tweedmouth and Kingsheath in 2010.
In May 2010, Asda announced the purchase of the 193 UK stores of Danish discount retailer Netto in a £778 million deal. The stores will continue to trade as Netto stores until early 2011, when Asda plans to integrate the stores into its supermarkets division, designated for shops smaller than 25,000 square feet (2,300 m2).[40]
In October 2003 Asda launched a new format called 'Asda Living'. This is the company's first "general merchandise" store, containing all its non-food ranges including clothing, home electronics, toys, homewares, health, and beauty products. With these stores they have linked up with Compass Group who operate the coffee shop Caffe Ritazza within some of the stores. The first store with this format opened in Walsall, West Midlands, and at the time of writing has been followed by ten further stores.
In 2004, the George clothing brand was extended to a number of standalone George stores on the high street, with the first George standalone store to open was in Preston. In 2008, all George standalone stores were closed due to high rental costs resulting in low profitability,[41] The Falkirk and Crewe branch were kept open as they are located next to the Asda store. The Manchester Fort store was converted into a 'ASDA Living' store.
In April 2006, Asda launched a new format called 'Asda Essentials' in a former Co-op store in Northampton, followed by another in Pontefract a month later. This was modelled on the French Leaderprice chain, with a smaller floorplate than Asda's mainstream stores. Essentials focuses primarily on own-brand products, only stocking branded items that are perceived to be at the "core" of a family's weekly shop. This style of retailing is an attempt to address competition from discount supermarkets such as Aldi, Lidl and Netto. On 6 December 2006 The Guardian newspaper reported that further planned store openings were under review following poor sales in the existing outlets. It was also revealed that the range of branded products has been expanded.[42] In early January 2007 it was announced that the initial trial Essentials store would close within a month after only 10 months of trading.[43]
Asda also has 26 depots all across the UK which distribute across the network of stores. There are depots for chilled foods, clothing and ambient products, such as carbonated drinks and cereals.[44]
On 10 June 2008 Wal-Mart announced that it has agreed to sell Gazeley Limited Group, the property development subsidiary of Asda, to Economic Zones World (EZW), a Dubai World company. Gazeley is involved in the development of distribution warehousing in the UK, mainland Europe and China and has extended its operations to India and Mexico. Its customers include many of the world's leading companies, third-party logistics providers, original equipment manufacturers, retailers and their suppliers. Gazeley is also a preferred developer of distribution space for Wal-Mart International, including Asda in the UK and Wal-Mart China.[45]
Asda has established a financial services division, following in the footsteps of Tesco, Sainsbury's and other retailers. Asda simply attaches its own brand to products provided by other companies. Services they offer include insurance (provided by Norwich Union), credit cards (provided by Grupo Santander) and loans (provided by the Funding Corporation). The Financial Services division of the organisation does not directly sell these services in store and instead uses the supplier of that product by telephone or online/postal application. Until June 2009 selected stores had Credit Card Representatives provided by GE Capital Bank and then Grupo Santander. Marketing and management of Financial Services is co-ordinated in house and many stores have a Financial Services Co-ordinator, responsible for promoting the products and ensuring legal compliance. The Financial Services division is also responsible for Gift Cards, Christmas Saver and Business Rewards.[46]
The company does not run a loyalty card scheme, stating that "we prefer to invest the money we'd use to set up such a scheme into driving down prices for our customers".[47] However, the Asda-branded Credit Card (provided by Grupo Santander) offers a points scheme, though these points can be earned on all spending.[48]
Asda launched its online retailer service in 1998, but from the start had over-estimated demand. It began with a dedicated depot based in Croydon, South London, but this was closed with a number of redundancies shortly after as sales were lower than expected. It continued the online service, but emulated the Tesco store-based model instead.
Since the roll-out of the grocery delivery operation Asda has moved into non-food online retailing. Current categories include entertainment, contact lenses, furniture, travel, electricals, gifts, mobile phones and flowers, with more categories being launched each year.
In May 2004 it announced a major expansion of the service which would increase coverage from 30% of the UK population to 35%.The Grocer magazine reported a turnaround in the fortunes of Asda's home shopping service under new head of Home Shopping, Richard Ramsden. More recently, Asda stepped up its commitment to home shopping, focusing on full UK coverage by the end of 2007. Andy Bond highlighted that Asda will be recruiting up to 1,800 new staff to bolster its operations and focus on competing with Tesco in the online arena.
In January 2007, Asda launched www.asda-electricals.co.uk to compete with Tesco's highly successful Tesco Direct. In October 2008, Asda launched direct.asda.com superseding its electricals website and also selling several additional product categories such as homeware, garden and toys. This new venture is part of its online business Asda Direct, with more than 3,000 domestic and home electrical products. Asda's long term ambition to capture 5% of the £1.9 billion market by 2012. Recently, the company sold its Durabrand 1005 DVD player for only £9, the UK's lowest priced DVD player, which sold out in just two days from start of the promotion.
As of March 2009[update], Tesco has a 30.4% share of the UK grocery market while Asda's share is 17.5%, followed by Sainsbury's at 16.1%, and Morrisons at 11.8%.[49]
According to CACI, as of 2006, Asda has market dominance in 14 postcode areas; DY (Dudley), B (Birmingham), CH (Chester), L (Liverpool), WN (Wigan), BL (Bolton), BB (Blackburn), LA (Lancaster), HU (Kingston upon Hull), SR (Sunderland), DH (Durham), NE (Newcastle upon Tyne), G (Glasgow) and AB (Aberdeen).[50]
| Supermarket | Consumer Spend (£000s) |
Market Share March 2009 |
+/- from March 2009 |
|---|---|---|---|
| Tesco | 6,453,370 | 30.4% | 4.3% |
| Asda | 3,411,938 | 17.5% | 8.5% |
| Sainsbury's | 3,239,500 | 16.1% | 5.7% |
| Morrisons | 2,327,583 | 11.8% | 7.2% |
Asda has 150,000 employees, whom it refers to as "colleagues" (90,000 part-time, 60,000 full-time). The company has featured prominently in lists of "Best companies to work for", appearing in second place in The Times newspaper list for 2005.[51] It offers staff a discount of 10% on most items (exceptions include fuel, stamps, lottery, giftcards and tobacco related items).[52]
There is, however, an eventful history in dealings with union bodies. The company was fined £850,000 in 2006 for offering 340 staff at a Dartford depot a pay rise in return for giving up a collective union agreement.[53] Poor relations continued as Asda management attempted to introduce new rights and working practices shortly thereafter at another centre in Washington, Tyne and Wear.[54]
Some compromise was reached by June of that year, when a five day strike was called off after Asda management and the GMB reached an agreement.[55]
And it would appear that relations have thawed significantly since then, with both Asda and the GMB marking the death of a worker together on International Workers' Memorial Day [56]
In December 2007 Asda, Sainsbury's and other retailers admitted to price fixing dairy products between 2002 and 2003. Asda commented, "Everyone at Asda regrets what happened, particularly as we are passionate about lowering prices. Our intention was to provide more money for dairy farmers, who were under severe financial pressure at the time." So far in total these retailers have been fined £116 million. Tesco, Morrisons and dairy company Lactalis McLelland denied any involvement in price-fixing; however, the Office of Fair Trading (OFT) says it will carry on its investigation. It was announced that the alleged price-fixing cost consumers £260 million.[57]
Asda also operates a mobile phone network called Asda Mobile, which was launched in April 2007.
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