Asda is a United Kingdom supermarket chain which retails food, clothing and general merchandise. It became a subsidiary of the American retail giant Wal-Mart, the world’s largest retailer, in 1999, and is the second largest chain in the UK after Tesco, having overtaken Sainsbury's in 2003. Asda is currently expanding into the Republic of Ireland.
Asda is Wal-Mart's largest non-U.S. subsidiary, accounting for almost half of the company's international sales.
Asda's marketing promotions have usually been based solely on price, with Asda promoting itself under the slogan Britain's Lowest Priced Supermarket, 11 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 capitalized. 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, 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 deep trouble trying to sell too many different products. 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.
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 UK Prime Minister Tony Blair on planning issues. Asda, which at the time owned 230 stores and was in competition with Kingfisher plc, was purchased by Wal-Mart on 26 July 1999 for £6.7 billion.
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 the city centre of Leeds, 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, was replaced by Andy Bond.
In the smiley face "rollback" campaign, also used in Wal-Mart advertisements, a CGI smiley face bounces 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 is challenged by competitors, especially Aldi. Currently in Asda advertising is a theme featuring singing children and the previous tap of the trouser pocket advertising was reduced to a double-tap on a stylized 'A', still producing the 'chinking' sound. This has included an advert during the 2006 FIFA World Cup featuring the England footballer Michael Owen in an advert with the children singing Vindaloo. The latest advertising campaign has done away with the rollback hook in favour of featuring celebrities including Victoria Wood and Paul Whitehouse working as Asda employees.
Asda has been winner of the The Grocer magazine "Lowest Price Supermarket" Award for the past 11 years, 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 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. As a result Asda no longer cites itself as "Officially Britain's lowest priced supermarket", instead using "Winner: Britain's lowest price supermarket award".
For Christmas 2007, Asda reintroduced the "That's Asda price" slogan as well as the famous 'jingle' to some of its adverts.
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 February 2008 focus on price comparisons between Asda and its rivals, using the "Why Pay More" slogan and the Billy Childish version of the classic Dad's Army theme tune. The old Asda jingle has once again been removed.
Asda advertising slogans
|"Asda - Why Pay More?" (2008–present)|
|"There's no place like Asda!" (2007)|
|"All together better" (2004–2006)|
|"Permanently low prices forever" (2001–2004)|
|"More for you for Less" (2000–2001)|
|"Always happy to help" (1998–2000)|
|"That's Asda Price!" (1994–1998)|
|"Always LOW prices... ALWAYS" (1992–1994)|
|"Aiming to be Britain's best value retailer exceeding customer needs... always" (1990–1992)|
|"Best for less" (1988–1990)|
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. In 2000 following the acquisition of Asda by Wal-Mart, the Farm Stores products were phased out and replaced with the new Smart Price brand "based on Wal-Mart's Great Value and Sam's Choice".
Smart Price products are almost always the lowest price option (known as Cheapest On Display) 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. 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 reduced the price of a pack of Asda Smart Price eight thick pork sausages to 16 p meaning each sausage cost 2 p. This move made the headlines in June 2008 as it was during a credit crunch with higher food prices and a higher cost of living.
In 2005, Asda stated that the George range was a £1.75 billion business, including sales from Wal-Mart stores in the US 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.
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.
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.Asda Wal-Mart Supercentres 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 Milton Keynes store has opened since then and became the largest Asda Wal-Mart Supercentre. There are currently 21 Supercentres in the UK. Asda superstores There are 243 Asda superstores.Asda supermarkets There are 37 Asda supermarkets (including town centres).Asda Living stores 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. George clothing stores' In 2004, the George clothing brand was extended to a number of standalone George stores on the high street. George stand-alone stores are all to close due to high rent causing poor returns. Instead, Asda are going to focus on opening 10–12 new Asda Living stores in 2008.Asda Essentials
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 Neto. 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. In early January 2007 it was announced that the initial trial Essentials store would close within a month after only 10 months of trading.
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. This new venture is part of its online business, 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.
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 (Hull), SR (Sunderland), DH (Durham), NE (Newcastle upon Tyne), G (Glasgow) and AB (Aberdeen).
|Supermarket|| Consumer |
| Market Share |
20 April 2008
On "double discount day", in December 2005, Asda temporarily increased the staff discount to 20%, but excluded alcoholic drinks from the extra discount for reasons of "operational profit protection". In 2007 Asda chose to allow staff up to £100 off alcohol before discounts. They were also allowed to purchase items from the George range with 20% off. However, during this "double discount day", all edible and most non-edible grocery products and electrical items (excluding digital cameras) were not included. The GMB Union attempted to get Tesco to offer a similar discount to Asda staff as a publicity stunt, and Asda subsequently included these products in the extra discount, but with a maximum spend of £100, down from £250 in the years before the alterations. While the reinstatement of the discount was intended to be a publicity stunt that improved employee relations, it resulted in further bitter feelings. This was due to the fact that in the years previously, music albums, singles, DVDs, videos and video games had been included in the discount day, but were not reinstated with the rest of the discount after Asda backed down.
In February 2006, Asda was fined £850,000 for offering employees of a newly taken over distribution depot a pay rise to give up union rights. An employment tribunal found the American-owned supermarket chain guilty of promising 340 distribution staff a 10 per cent pay rise to give up the collective agreement negotiated by the GMB union – an act which is illegal under a 1992 labour relations law. The court ordered Asda to pay £2,500 to each employee at the County Durham depot.
In June 2006, GMB Union members at the company's UK distribution depots agreed to strike for five days from 30 June 2006. The two sides failed to agree on how many of Asda's 12,500 depot workers belong to the union across its 24 depots around the UK. The GMB claimed the figure as 7,000, but Asda claimed the number was nearer 4,500. The depots affected include Bedford, Chepstow, Dartford, Didcot, Erith, Falkirk, Grangemouth, Ince George in Wigan, Lutterworth, Lymedale (in Staffordshire), Portbury, Skelmersdale, Teesport, Wakefield, and Washington.
Asda threatened legal action, citing flaws in the ballot process, but after discussion at the TUC, an agreement was reached for a national level consultative body and the strike called off.