Asda attempts to reverse its decline with a loyalty scheme launch and private label expansion, says GlobalData – Retail Times


Following today’s release of ASDA’s figures for Q2 FY2022; Amira Freyer-Elgendy, consumer analyst at GlobalData, a leading data and analytics company, offers her view: “Asda’s Q2 decline is softer compared to last quarter (-9.2%), outperforming the likes of Sainsbury’s across a similar period (16 weeks to 25 June 2022) which reported a 4.0% decline in retail sales ex fuel on a l-f-l basis and a 2.4% fall in its grocery division – Asda’s grocery l-f-l sales fell 1.0%. Asda’s H1 performance now sits at -5.0% (ex fuel) and -5.6% on a l-f-l basis, still notably underperforming the total UK food & grocery market which fell 2.2% in H1, according to GlobalData. In response to shopper’s tightening their budgets, Asda has rightly invested in its customer proposition over the period with initiatives such as its price lock promise and private label range expansion, but this has taken a significant chunk out of Asda’s profits. The rewards of these investments are likely only to be registered in H2, with July grocery l-f-ls up 1.7%.

“Retailers are watching closely how shoppers are reacting to rising prices and are trying to address each type of shopper response, whether it be switching retailers, buying cheaper, or buying less, to maintain customer loyalty and protect their market shares. Most detrimental to retailers is consumers’ switching behaviours. In GlobalData’s latest monthly tracker (August), nearly 14.2% of grocery shoppers are switching retailers in response to price rises – of those 9% have switched away from Asda, while 4% have switched to Asda and away from other retailers. The net movement, however, is away from the retailer and many of them are flocking to discounters. More than a third of overall switchers are turning to Aldi and Lidl (37% and 33%, respectively), due to their strong reputation for unbeatable prices. However, Asda is trying to prevent switching by keeping its price lock promise on 100+ family favourites until the end of the year, which has already stimulated a +29% volume boost in those dropped & locked items in Q2.

“The most popular strategy for consumers (35.9%) is trading down to cheaper products at the same retailer, as it is the most convenient option for shoppers. To combat this, Asda is focusing on delivering value as a priority. Its private label Just Essentials brand has grown by 12% on Q2 2021, and we expect this to accelerate further as the range is expanded by 300 more product lines by March 2023.

“To stimulate shopping, attract consumers who are reducing their basket size (27.5% of shoppers are buying fewer items) and strengthen shopper loyalty, Asda has rolled out its Rewards Scheme nationwide and began promoting it in July in all its stores, after a selected store trial started in October 2021. For every shop, customers accumulate money, with some ‘star products’ giving them 10% cash back. On average, shoppers earn £5 per month in their ‘cash pots’ to spend in store. Said to be about ‘Pounds, not points’, the scheme seems to rival Tesco’s clubcard by making everyday savings very tangible. To keep up the momentum and to satisfy the needs of its customers, ASDA needs to better highlight its value proposition, especially quality, as it cannot compete solely on price due to the dominance of the discounters. However, its new schemes, product offerings and price lock make for a more promising start for H2 and will help prevent steeper share losses over the full year.”





Source link

Following today’s release of ASDA’s figures for Q2 FY2022; Amira Freyer-Elgendy, consumer analyst at GlobalData, a leading data and analytics company, offers her view: “Asda’s Q2 decline is softer compared to last quarter (-9.2%), outperforming the likes of Sainsbury’s across a similar period (16 weeks to 25 June 2022) which reported a 4.0% decline in…