Asda, which is currently in the process of being acquired, has reported relatively disappointing third-quarter figures when compared to the bumper growth experienced by its key rivals during the pandemic.
Over the 13-week period to 30 September, the group’s like-for-like sales (excl. fuel) rose by 2.7%. This compares to a 3.8% rise in the previous quarter and high single-digit growth reported by the likes of Tesco, Sainsbury’s and Morrisons in recent months.
Asda’s stated that growth during the period was driven by strong performance of its core grocery offer, back to school clothing and online shopping. Combined net sales for Asda.com and George.com jumped 72% year-on-year.
The supermarket said it expects this rapid growth in online shopping to continue during the next quarter with it increasing the capacity of its grocery home shopping service to 765,000 weekly slots in response. Asda has also extended its delivery partnerships trial with Uber Eats from 50 to 100 stores.
Asda highlighted that it was already seeing a surge in demand for Christmas products and ‘lockdown proof’ festive essentials as consumers started their preparations earlier than in previous years. Sales of Christmas trees have increased by 83% year-on-year, festive lights by 57%, Christmas puddings by 71% and mince pies by 44%.
The retailer stated that there were also signs that customers are preparing to celebrate Christmas differently this year with smaller gatherings. Sales of frozen turkey crowns, which typically serve 3-4 people, have increased by 230% year-on-year.
Asda’s CEO Roger Burnley said: “After a rollercoaster year it’s clear our customers are already planning for a very different Christmas. We have already seen a marked shift in buying patterns with customers stocking up their freezers and cupboards with festive essentials earlier than ever before, which suggests they are getting used to expecting the unexpected but preparing to enjoy themselves as much as possible.
“Whatever happens during the next few weeks, we are totally focused on delivering a great Christmas for our customers during these uncertain times.”
In recognition of the tough economic conditions, Asda relaunched its ‘That’s Asda Price’ slogan and ‘Pocket Tap’ messaging during the quarter as part of a £100m investment in lowering prices. The retailer pointed to a recent customer survey that showed almost half of respondents (46%) expect their financial situation to worsen in the coming months and more than three quarters (77%) said they are not optimistic things will improve in 2021.
Burnley added: “Asda’s heritage is anchored in providing customers with low prices and great value every time they shop and we and we can reassure them we will continue to offer this during the challenging economic times that lie ahead.”
The results statement concluded by saying that the £6.8bn acquisition of Asda from Walmart by the Issa brothers and TDR Capital remained on track to complete in the first half of 2021, subject to regulatory approval.
NAM Implications:
- Asda pressing the right buttons…
- …but with less impact than its rivals.
- Suppliers, given the imminent change of ownership…
- …have to challenge their designation of the retailer as Invest, Maintain or Divest…
