Asda Stores Ltd. is a British supermarket retailer, headquartered in Leeds, West Yorkshire. The company was founded in 1965 when the supermarket owning Asquith family merged with the Associated Dairies company of Yorkshire. It expanded in to the south of England during the 1970s and 1980s, and acquired Allied Carpets, 61 large Gateway Supermarkets and other businesses, such as MFI, then during the 1990s, sold off its acquisitions to concentrate on the supermarkets. It became a subsidiary of the American retail corporate giant Walmart after a £6.7 billion takeover in July 1999, and was the second-largest supermarket chain in Britain between 2003 and 2014 by market share, and is currently third behind Tesco and Sainsbury's.
Besides its core supermarket retail format, the company also offers a number of other products, including financial services and a mobile phone company using the existing EE network. Asda's marketing promotions are usually based solely on price, and since 2015, like its parent company, Walmart, Asda promotes itself under the slogan "Save Money. Live Better". Since 1987, Asda also has its property development subsidiary, McLagan Investments Ltd, which is based at the main Leeds head office site. The company is responsible for acquiring land for new Asda store developments, along with the relevant planning applications that are submitted to local councils, and the potential acquisition of any retail stores or developments placed for sale on the open market by any of its main competitors.
As a wholly owned division of Walmart, Asda is not required to declare quarterly or half-yearly earnings, but it submits full accounts to the U.S. Securities and Exchange Commission each November. Despite being a subsidiary of Walmart, the company has more autonomy than any of the other supermarket chains within the Walmart International division, and has retained its own British management team and board since the 1999 takeover.
History
Early history
The Asquith family were butchers based in Knottingley, West Yorkshire. In the 1920s, their rising aspirations meant that they expanded their business to seven butchers shops in the area. Their sons, Peter and Fred, later became founding members of Asda.
Around the same time, a group of West Riding dairy farmers, including the Stockdale family and Craven Dairies, joined together under the banner of J.W Hindell Dairy Farmers Ltd. This company diversified in 1949 to become Associated Dairies and Farm Stores Ltd, with Arthur Stockdale as the managing director.
First stores
In 1963, the Asquith brothers converted an old cinema building, the Queens in Castleford, into a self-service supermarket. Another swiftly followed in the old indoor market at Edlington, near Doncaster. Both stores traded under the name of 'Queens'. Instead of converting an existing building, their next store was a purpose-built supermarket in South Elmsall, near Pontefract on the site of the old Palace cinema.
In 1965, when the Asquith brothers approached Associated Dairies to run the butchery departments within their small store chain, a merger was proposed. So they joined together with Noel Stockdale, Arthur Stockdale's son, to form a new company, Asquith + Dairies = Asda (capitalised from 1985).
Another store opened in Wakefield then in Wortley, Leeds which was swiftly followed by another supermarket in the Whitkirk suburb of Leeds, which consolidated the newly formed supermarket division of Associated Dairies. By 1967, the company had moved outside of Yorkshire to set up a store in the North East in the industrial town of Billingham, Teesside, which is still trading to the present day. By 1968, the Asquith brothers had their stake in the merger bought out by Noel Stockdale, and the Asda Queens stores became the sole property of Associated Dairies and the Queens name was removed as the stores became known solely as Asda.
Asda took advantage of the abolition of retail price maintenance to offer large-scale, low-cost supermarkets. This was aided by the risky decision to acquire three struggling US-owned branches in the mid-1960s of the GEM retail group. The Government Exchange Mart stores in Preston, Lancashire, Cross Gates, Leeds and including the first out-of-town store in West Bridgford in Nottingham, that opened in November 1964, had accumulated losses of £320,000 and offered to sell the stores for 20% of whatever Asda could recoup as losses from the Inland Revenue. They received the whole amount back so got the stores for free. The rent was only 10 shillings (50p) per square foot on a 20-year lease, with no rent reviews- all in all a great deal. Asda increased GEM's £6,000 per week sales to around £60,000 per week in just six months with the new stores named solely as just Asda.
Asda rebuilt the West Bridgford store in 1999, adjacent to the old site which was demolished and is now part of the current store car park. The Preston store was based on the ground floor of a converted mill which had been occupied by a supermarket called Fame prior to GEM taking over, and then subsequently Asda. The mill was demolished in the mid-1980s when Asda opened two new purpose-built superstores in the area. One was in the centre of Preston located at the Fishergate Shopping Centre, which closed in 1992 less than 7 years after opening due to poor trading. And the second was located in the suburban district of Fulwood. The Fulwood store is still trading today and is a very popular store. The Cross Gates store in Leeds was closed in 1992 along with the Whitkirk and Wortley stores, and their replacement was a large superstore built in the Killingbeck area of the city which had opened in the autumn of 1991. The Wortley store ended up being sold to Netto UK in 1992, but was rebought when Asda acquired the Netto chain in 2011, to become part of its small supermarket division.
Rapid expansion of the 1970s
The 1970s had seen Asda rapidly expanding to open large superstores in edge-and out-of-town locations, and to build stores with district centres in smaller towns. It also added more petrol filling stations to stores, along with car tyre bays run by ATS. With over 30 stores in the north of England, Asda began their expansion into the south of the country with the opening of new stores in the Estover area of Plymouth, Devon and Gosport, Hampshire in 1976. Closely followed by its first store in South Wales in Rogerstone, Newport, which relocated to a larger store in nearby Duffryn in 1989. South Woodham Ferrers, near Chelmsford, Essex and Whitchurch, Bristol.
By 1981, under the soon to be outgoing, Managing Director, Peter Firmston-Williams, 80 Asda stores were trading. When he first became head of the Asda stores division in 1971, he introduced delicatessen counters and in-store bakery departments to all Asda stores. The last store to open under his tenure was in the Manchester suburb of Harpurhey. But the growth of the chain was slowing down and their southern expansion had been expensive. They had been fighting with southern rivals Tesco and Sainsbury's to acquire prime retail sites in the more affluent South East counties of England. Indeed, the first London store was not opened until 1982, in Park Royal, near Ealing, which was rebuilt in 2001.The Isle of Dogs and Charlton, London stores followed on rapidly in 1983. The 1970s and '80s saw the diversification of Asda's product base, including the acquisition of Allied Carpets in 1978, Wades Furniture, Asda Property, and in 1985, Asda Drive - where the company unsuccessfully piloted a scheme to sell cars in a few of its largest stores. These diversifications were as a result of Associated milking two cash cows. The dairy side of the business was making huge profits, as was the supermarket division. And with planning permission for new stores being restricted by local councils up and down the UK, and with prime sites being so expensive. Associated Dairies ambitions in the short-term could only be met by expanding rapidly with these peripheral businesses. Ultimately, these non-food ventures generated very little profit and drained capital expenditure away from the main dairy division and supermarket chain.
Decline in the 1980s and early-1990s
The 1980s were a turbulent period for Asda as they moved away from their founding principles of price competitiveness and good value. In 1984, new Managing Director, John Hardman, made bold attempts to halt Asda's decline, which included the development of completely new look stores, first trialled in 1985 at a three-year-old store in Leamington Spa, Warwickshire, which contrasted with older Asda stores with their spartan, carton stacked, minimalistic interiors and chocolate brown and beige artexed walls.
A new green corporate logo which was capitalised as ASDA was also introduced. More upmarket and tastefully decorated stores with soft pastel colour tones, suspended ceilings and zoned areas were built, and introduced to older revamped stores. More specialist fresh food counters such as fresh fish, pizza bars, salad bars, and patisserie counters were brought in to entice more wealthier shoppers. Softer lighting was introduced to stores along with the launch of Asda own-label products in 1986, centralised distribution depots by 1989, and by the end of the decade the 'Asdale'-named clothing range was replaced by the clothing ranges from the newly formed George Davies partnership with Asda. Davies was an experienced and successful entrepreneur who had founded the Next clothing chain of retail stores. These changes were initially positive for the company, but they came at a cost.
The recession of the early 1990s impacted on the average household budget, and affected the amount of disposable income that the average consumer had to spend, and with rising inflation it hit Asda customers whose stores were more heavily concentrated in the north than in the more affluent south east harder. The move upmarket had also pushed in-store service and labour costs up which impacted on profit margins and sales.
Asda had also neglected many of the older stores within its estate by not refurbishing them in line with other stores that had been refurbished and its more expensive new store sites. One example was the Astley Bridge, Bolton store which had been built in 1970. This store did not receive its first major refurbishment until 1993, and was until that point still trading with the old blue and orange Asda corporate logo and signage attached to the building in various positions, and there were many other stores like that. It meant that Asda had left the older, outdated unrefurbished stores in locations where competitors were opening new stores more vulnerable to losing customers to their shiny new rivals.
Asda had also heavily increased prices across its ranges to try to offset growing operating costs and increase volume sales and margins which had narrowed within its stores, as a result customers deserted the chain in droves. This was compounded by problems with start-up costs and teething troubles with the new regional distribution depots. Computer systems taking restock orders from stores and then ordering goods, especially fresh food, from suppliers that were meant to come into the depots and then delivered on to the stores were not functioning properly, which meant stores ran out of stock of some items for days at a time. That also meant that the company had to temporarily use manual ordering, which of course meant a loss of sales at stores and wastage costs that ran into tens of millions of pounds. Asda was entering a vicious circle with a flawed and compromised trading strategy and with a management team who were floundering and in charge of a company heading into a steady decline.
Between 1985 and 1987, Associated Dairies Group PLC, and Asda Stores Ltd, merged with MFI (Mullard Furniture Industries) and the group was renamed Asda-MFI Group plc. The other companies in the group were Associated Dairies Limited, the furniture retailer MFI and Allied Carpets. After the sale of MFI in 1987, the company name changed to Asda Group plc. The Associated Dairies division was renamed as Associated Fresh Foods, the abattoir and meat processing plant at Lofthouse, near Wakefield, which supplied fresh meat to all Asda stores was renamed as Lofthouse Foods. The focus of the group had switched firmly by the late 1980s to the Asda store chain. In 1988, Asda had also acquired the Waring & Gillow, Colonel Gee, and Maple & Co furniture brands and Maples stores. Co-branded stores under the Allied Maples banner had appeared on major retail parks. But, in 1993, the whole fresh food division, including the Asda Produce, fruit and vegetable sourcing, processing and packing plant in Normanton, Wakefield, was sold off in a management buyout to other dairy and food processors. In the same year, Maples was divested in a management buyout, and became an independent company again until it went into liquidation in 1997, and the stores were bought out by the now defunct Allders department store chain. Allied Carpets and some of the co-branded Allied Maples stores were sold off to the now defunct Carpetland. This means that Asda has since had no connection with any of the firms from which its name was derived.
Near bankruptcy and purchase by Walmart
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. City estimates suggested that Asda had overpaid by around £300 million for 61 of the largest Gateway stores, two undeveloped store sites and a distribution centre. That was far above the net book value of the locations some of which were poorly sited. Asda has subsequently relocated or rebuilt more than 40 of the original Gateway stores since the late 1990s. This move overstretched the company and by 1991 it found itself in serious financial trouble and saddled with £1 billion worth of debt The situation was so dire Asda was close to breaching its banking covenants and came very close to bankruptcy. The city at that point widely regarded Asda as a basket case and predicted an early demise for the chain. As a result, it was forced to raise money from shareholders in both 1991 and 1993 through two major rights issues. Asda was back in the black by late 1993 and completely transformed and revived by 1995 in one of the most successful turnaround stories in British retail history 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 1996â€"99, and remodelled the store along the lines of the world's largest retailer, Walmart, sending protégé Allan Leighton to Bentonville, Arkansas to assess and photograph the systems and marketing deployed by Walmart.
When Norman left the company to pursue his political career, he was replaced by Leighton. Walmart wanted to enter the UK market so CEO Bob Martin lobbied British Prime Minister Tony Blair on planning issues. Asda, which at the time owned 229 stores, was purchased by Walmart on 26 July 1999 for £6.7 billion, trumping a rival bid from Kingfisher plc.
After purchase by Walmart
Following the takeover, Asda retained its headquarters at "Asda House". The site was officially opened in 1988 by the then Prime Minister, Margaret Thatcher. Asda previously had an assortment of seven different offices throughout Leeds, including Craven House, on the outskirts of the city in Kirkstall Road. The largest being, Britannia House, located at the converted Britannia Mills site in Morley. This was demolished along with an older Asda superstore which was rebuilt with a larger sales area on land adjacent to the old site. The new head office building brought all of the administration departments under the same roof for the first time. This new building was also 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 during the late 1980s. Asda has more recently also leased space in "The Mint" office development adjacent to the main head office site, and has taken office space as part of the redevelopment of the former Carlsberg-Tetley brewery site across the road to support its ever-growing administration, IT operations. Asda also built new Britannia House in Morley on the site of one of its old head office sites. This building is directly behind the Morley superstore, and the customer service team based at Asda's South Bank head office relocated to new Britannia House in February 2016. The Leeds grocery online home shopping centre is also located on the Morley site.
In 2005, amid reported concerns within Walmart 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 former Safeway stores from Morrisons.
Asda's property development arm, Gazeley Limited, was sold to Economic Zones World (EZW), a Dubai World subsidiary, in June 2008 for in excess of £300m. Gazeley was involved in the development of distribution warehousing in the UK, mainland Europe and China, for customers including third-party logistics providers, original equipment manufacturers, retailers and their suppliers.
In November 2008, there were reports that Asda was to buy Irish retailer Dunnes Stores.
In August 2009, Walmart "sold" Asda for £6.9 billion to their Leeds-based investment subsidiary Corinth Services Limited. The deal was described as part of a "group restructuring" and meant Asda remained under the control of Walmart, since Corinth is itself a Walmart subsidiary.
On 11 May 2010, Andy Clarke, a former manager of an Asda store, who was also the chief operating officer, was appointed as CEO.
In May 2010, Asda bought the original Netto UK supermarket chain in a £778 million deal. The deal provided the company with smaller stores that became part of the supermarket division formed in 2009, with most Netto stores being only one fifth of the size of a branch within the core Asda superstore format. In September 2010, Asda was required to sell 47 of the existing 194 Netto stores following a ruling by the Office of Fair Trading. The rebranding of Netto stores to Asda began in early 2011.
In June 2016, it was announced that Andy Clarke, CEO since 2010, would be replaced by Sean Clarke, the head of parent company Walmart's operations in China. Sean Clarke officially became CEO of Asda on 11 July 2016.
Roger Burnley also rejoined the company as deputy CEO and COO (chief operating officer) in October 2016. Yorkshireman, Mr. Burnley previously worked for Asda between 1996 until 2001. He was in charge of overseeing the integration of Asda IT systems and logistics into Walmart's operations after the 1999 takeover, before joining Sainsbury's in 2002, where he remained until 2015.
Stores
Asda originally had a "simple and fresh" store format, which under Archie Norman's team and the later mid-'90s focus on a Walmart style strategy became more emphasised. The stores had a simplistic three zone layout but built on a Walmart larger footprint format â€" Asda's average store is almost 20% bigger than its rivals, with a range of over 30,000 different products in its largest stores.
However, the preferred large-format stores have brought problems to Asda's growth beyond its spurts in both the 1990s and immediate post Walmart 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. These plans were mothballed shortly after because of the recession and the reining in of spending by consumers on non-food purchases.
In February 2011, Asda announced the purchase of six stores from Focus DIY, which were converted into supermarkets later that year.
In 2015, all Asda stores celebrated the company's 50th anniversary, and that reached a milestone on 7 September with the opening of the 600th store in Gillingham Pier, Kent, which forms part of a much larger redevelopment of the former historical Royal Naval Dockyard in Chatham by property developer Peel Holdings.
Other new store openings in 2015 also included Norwich, the second Asda superstore within the Norwich area located to the south of the city in the Tuckswood district, Alsager, Tranent, Pyle, Hayes, Hillingdon, London suburb, Marple, Greater Manchester, and Altrincham. New high street format, town centre stores also opened in Deptford and Wealdstone in the London area. Asda relocated their old Barking store from the town's main shopping centre to a new, bigger site. The company also replaced their small store in Beeston, Leeds with a larger store and a new petrol filling station on brownfield land adjacent to the old site. And, B&Q sold half of the sales area of their huge Redditch DIY warehouse store for Asda to redevelop into a new superstore.
In the autumn of 2016, Asda opened new stores in areas including Clacton-on-Sea, Lewisham, Stantonbury, within the Milton Keynes boundary area, and Barnstaple. On 28 November the company opened its 630th store as one of the main anchor tenants of the new Barons Quay development in Northwich. Asda will open a new superstore in Newport, Isle of Wight in August 2017. This will be the first Asda store on the Island, it's main competitors have already been long-established on the Isle of Wight with their own stores since the 1980s/1990s. In 2017, Asda opened stores in different areas including Raunds, South Ruislip and Selsey.
Between the summer and late autumn of 2016, mobile phone and credit/debit contactless card payments were rolled out to all Asda stores, after initial trials began in some London area stores in 2012.
Store formats
Asda Supercentres
Following the takeover by Walmart, several "Asda Walmart Supercentres" have been opened, creating some of the largest hypermarkets in the United Kingdom. Since 2006, all new Supercentres have been solely branded as Asda Supercentre without the Walmart branding. The first Supercentre with a sales area of 8,600 m2 (93,000 sq ft) opened in Patchway, Bristol in the summer of 2000. The first Scottish Supercentre opened in Livingston, in 2001. The Bletchley, Milton Keynes Supercentre which opened in November 2005 is currently the largest Asda Supercentre with a net sales floor of over 11,000 m2 (120,000 sq ft). This was preceded in June 2002 by the Eastlands, Manchester store which was the largest store at the time with a sales area of 10,000 m2 (110,000 sq ft) but is currently the second largest Asda Supercentre, and the third largest is located in Minworth, West Midlands, followed by Patchway. As of 31 January 2017, there are 32 Supercentres. There have been no more new Supercentre openings since 2008, and the dual Asda Wal*Mart branding on the older Supercentres is being gradually phased out in favour of using the sole Asda branding as each store comes up for major refurbishment work. Most supercentres have now removed the dual Walmart branding. Most supercentres also have a petrol station. They also have either a customer cafe, or a McDonald's franchise restaurant. However, the Pudsey supercentre has both. This store is also the only supercentre to have a basement-level sales floor underneath the original surface-level ground floor sales area. At the time of the Pudsey superstore conversion to the supercentre format in 2002, the building contractors could not build a traditional exterior extension due to lack of space, because the Pudsey site had been a joint venture development with Marks & Spencer in 1990, and they had a large store immediately adjacent to the Asda store. So, it was decided that instead of creating a first floor mezzanine level extension it would be better to drill down underneath the original shop floor to excavate and create a new basement store extension.
Since 2015, some supercentres and larger superstore locations have introduced "Express Diners". Supercentres that have been recently refurbished in locations such as Eastlands, Stevenage, Tamworth, Staffordshire and Huyton, Liverpool have removed the supercentre signage altogether, along with the red lollipop 24 hour opening banners. Since 2016, Asda are only using their new 2015, refreshed logo on exterior signage, with the exception of third party retailers who they lease sales floor space to. This is being rolled out to all stores regardless of store size and format by 2019. These stores also added a McGee's traditional craft butchery department, who already operate the fresh meat counters within all 16 of the Northern Ireland Asda superstores. They also opened Decathlon sportswear and equipment stores during their refurbishments between April and June 2016. Decathlon signage is prominent on the exterior of these stores.
Asda Superstores
Asda superstores are large supermarkets with a non-food offer slightly smaller than an Asda Supercentre. As of 31 January 2017, there are 339 superstores. Most superstores have a petrol filling station and dining and refreshment facilities for shoppers such as customer cafes, selected stores have McDonald's or "Express Diners" The Old Kent Road, Scunthorpe and Colindale stores are trialling a Subway franchise. There are currently no plans to roll the Subway franchise out across the chain.
Asda Supermarket
The Supermarket division was formed in 2009. As of July 2010, there were 26 small format supermarkets some of which were acquired from the Co-operative Group. The first three acquisition stores opened mid-2009 in Wellington, Somerset; Lancing, West Sussex and Pershore, Worcestershire. This was followed by Cumnock, East Ayrshire; Tweedmouth, Northumberland and Kings Heath, Birmingham in 2010. The largest supermarket format store in the UK was built and opened in 2007 in Highbridge, Somerset. This store is now part of the core superstore estate.
In May 2010, Asda announced the purchase of the 193 UK stores of Danish discount retailer Netto in a £778 million deal. But the Competition Commission made them sell off 47 of the stores to other retailers. The remaining stores continued to trade as Netto stores until early 2011, when Asda integrated the stores into its supermarkets division, designated for shops smaller than 2,300 m2 (25,000 sq ft). There are now over 200 stores in the smaller supermarket division. Asda have also continued to purchase stores from different Co-operative societies in other parts of the UK such as Kettering, Northamptonshire; South Wootton, Norfolk and Tiptree, Essex. They have also converted empty retail stores formerly operated by the likes of B&Q (Chadwell Heath, East London), Wickes (Tunbridge Wells, Kent) and Smyths Toys (Mitcham, Surrey) into stores within the supermarket division. Although with a larger sales area than most stores within the division itself, they are just under the size that would make them part of the core superstore estate. Asda have also invested heavily into new build smaller stores. An increasing amount of these smaller stores, including some of the former Netto stores have added petrol stations. And, with the acquisition of other smaller stores from competitors, existing customer cafes inherited from former rivals have been converted to an Asda Cafe or Express Diner. Some new build Asda supermarkets are also adding these facilities. With the introduction of the new Asda logo in 2015, the 'supermarket' branding is being removed as the company is only using the refreshed Asda logo on exterior signage regardless of store size and format. All stores will adopt this uniform policy by 2019. As of 31 January 2017, there are 206 supermarkets.
Asda Living
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 Living Cafe within some of the stores. The first store with this format opened in Walsall, West Midlands. As at 31 January 2017, there are 33 stores with an average 2,600 m2 (28,000 sq ft) sales selling an average 23,000 non-grocery products in-store.
George Stores
In 2011, Asda announced its intention to establish a small number of pilot George stores. In January 2012 Asda announced that it had agreed to terms with two franchise partners to open international George stores. Through the agreement with SandpiperCI, based in the Channel Islands, the company will be responsible for opening George franchises in both Jersey and Guernsey, and through the Azadea Group, headquartered in Beirut, Lebanon, the George franchise stores would open in the Middle East. The opening of the first George stores in both regions are expected before the end of 2012.
Asda Essentials
In April 2006, Asda launched a new trial format called 'Asda Essentials' in a former Co-op store in Northampton, followed by another in Pontefract a month later. This was the old Kwik-Save building for Pontefract. The stores were modelled on France's Leader Price chain, with a smaller floorplate than Asda's mainstream stores and with a primary focus on own-brand products, only stocking branded items that were perceived to be at the "core" of a family's weekly shop with the aim being to challenge the dominance of Tesco and Sainsbury's in the convenience store market while at the same time addressing 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, while the range of branded products being carried was also being expanded due to customer demand. In January 2007 it was announced that the original trial store would close within a month after only 10 months of trading. The Pontefract store continues to trade and is now part of the Asda supermarket division.
Asda Petrol
In 2012, Asda trialled a new standalone petrol filling station format (which means that they are not attached to or near an existing Asda store) at two locations in Sale, Greater Manchester and Leeds Bridge, which is located near to their head office. They include a small convenience store and click and collect facilities. The trial was a success and in 2014, a full roll out of this format was announced after a third site opened in Northolt, West London. In February 2015, 15 petrol filling stations were acquired from Rontec Ltd, and converted to the new format. Asda originally aimed to have at least 100 standalone forecourts by 2018. However, in October 2015, the company decided to slow the roll out down to address the problems associated with a major collapse of profits from its large store formats due to intense competition from its main rivals. But, the company is still continuing to add a combination of fully automated credit/debit card payment only petrol stations and petrol stations with traditional forecourt shops within the car parks of its existing store portfolio and to new store sites. Asda was also the first supermarket chain in the United Kingdom to sell petrol at its old Halifax store in 1967. Back then its forecourt fuel was supplied by discount Russian supplier Nafta, because the major oil companies would not supply fuel to be sold at discount prices. From the early seventies, oil companies such as Mobil, Shell and Texaco supplied fuel to Asda as more supermarkets started to sell fuel from car park forecourts. Since the mid-1990s Asda has supplied, along with its main supermarket rivals, its own fuel delivered by its own tankers to its petrol station forecourts. Since December 2016, Asda operated 301 petrol stations in total, most within the car park area of its stores. And, as of 31 January 2017, that includes 21 standalone petrol stations.
George 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. The Falkirk and Crewe branch were kept open as they are located next to the Asda store. The Manchester Fort store was converted into an 'Asda Living' store.
Brands and services
Asda Smart Price
Asda Smart Price is a no-frills private label trade name. The equivalents from the three other big supermarkets are Tesco Everyday Value, Sainsbury's Basics and Morrisons M Savers.
In 2000/2001, the Smart Price brand replaced the Asda Farm Stores budget brand which had been introduced, at first initially, into some underperforming stores back in 1993. They had 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, including fresh pies and quiches, pre-packed cooked meats, dairy products such as pre-packed cheeses, yogurt and cottage cheese and a selection of frozen foods such as frozen chips, burgers, ice cream and a small range of ready meals. The range later expanded to include selected fresh fruit and vegetables, tinned goods and household cleaning products and detergents.
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 it has since expanded to cover various product ranges within the store, including some household goods and kitchenware. 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. As of 2015, all kitchenware, own brand electrical and household goods are now part of the George Home range.
Asda's Smart Price logo and packaging has changed several times since its introduction. In 2012, it was revised to match the branding of the Walmart Great Value line, but a further redesign in 2014 removed any similarity in visual style.
Since the autumn of 2016, most fresh food Smart Price products have been phased out and replaced by better quality products under the Baker's Selection, Butcher's Selection, Fishmonger's and Grower's Selection sub-brands, and the core Asda own label branding. This is the decision of the new management team to focus on better quality food products and improve customer perception of the quality of products on sale within the stores. The Smart Price brand is still used for a small number of chilled ready meals, a few selected number of ambient grocery products, and a small number of household cleaning products and accessories. The Smart Price branded products will be replaced completely by 2018.
Also, under the new Asda management team it was decided to reintroduce the Farm Stores brand on selected fresh food products, as part of the company's plans to return and reconnect to its core founding heritage. These products include fresh meat and produce. The Farm Stores brand was officially relaunched into all stores in April 2017.
Chosen By You
In 2010, Asda relaunched its mid-tier Asda own label brand, first launched in 1986, as part of a £100m investment to boost the supermarket chain and reverse the decline in sales, to the current name of 'Chosen By You' or its acronym 'CBY' in an effort to change consumer perception that since the sale of Asda to Walmart, the supermarket chain only concentrated on low prices. It was also a move to reassure customers that Asda still concentrated on "quality as it does on price". The new brand name for its own standard range of products, 'CBY', was designed to acknowledge that the products are taste tested before putting into production; the testing process included (as of September 2010) some 40,000 consumers to ensure the items met the average consumers needs. The 'CBY' brand would be more upmarket than the 'No Frills' 'Smart Price' range as it represented the main Asda own label brand, but would be cheaper than the more upmarket and premium Asda 'Extra Special' label which now has new product lines formulated and added to its ever-growing range in partnership with the prestigious and widely respected, Leith's Cookery School of Fine Food and Wine. Following the recession that began in 2009 customers were turning to cheaper supermarket chains, Like Aldi and Lidl to save money, this was the reason Asda was continuously losing its market share along with other large retailers, like Tesco, Morrisons & Sainsburys. 'CBY' was one way Asda's new boss Andy Clarke, as of May 2010, planned on reviving Asda and prevent it significantly struggling to get through the recession. Own brand products from ranges like 'Chosen By You', 'Extra Special' and 'Smart Price' accounted for half of Asda's turnover, hence why this was such a major relaunch.
Since September 2015, with the rollout of the new Asda logo which incorporates four of the six yellow Walmart logo 'sparks' around the first letter A, the mid-tier Asda brand packaging is being redesigned and the Chosen By You logo slogan is being phased out as each product is relaunched.
Asda also ended their partnership with Leith's in the autumn of 2015. All 'Extra Special' products are created and developed by Asda speciality chefs based at the product development kitchens within the Leeds head office.
Since the autumn of 2015, Asda have introduced four sub-branded labels including Grower's Selection, for fresh fruit and vegetables. Butcher's Selection, for all fresh meat, game, and poultry products. Fishmonger's Selection, for all fresh fish and seafood products, and Baker's Selection for all bakery items freshly made and baked in-store.
In 2016, Asda won the Quality food retailer of the year award across all of its own-label ranges, voted for by judges from the Quality food industry awards. It also won seafood retailer of the year and fresh turkey retailer of the year.
George clothing
Asda has its own range of clothing known as George which was created and trialled in selected stores in 1989, and officially launched and rolled out to the main superstore estate in 1990. It replaced the older Asdale/Asda clothing labels of the seventies and eighties. This is marketed as quality fashion clothing at affordable prices. Walmart also sells the George brand in Argentina, Canada, China, India, Japan, Mexico, and the US (and in South Korea until Walmart pulled out of that market). George clothing is also sold at four stand alone dedicated stores in Malta, the first opening in 2013. The label is named after George Davies, founder of Next, who was its original chief designer. Davies himself parted company with Asda in 2000 and is no longer associated with the brand.
In 2005, Asda stated that the George range was a £1.75 billion business, including sales from Walmart stores in the United States 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 £60 while adult bridesmaid dresses ranged between £30 and £35, at launch.
Asda Mobile
Asda also operates a mobile phone network called Asda Mobile, which was launched in April 2007. This is provided in partnership with EE.
Asda Money
Asda has a financial services division, similar to those operated by Tesco, Sainsbury's and other retailers. Asda simply attaches its own brand to products provided by other companies. Services offered include car insurance (provided by Brightside Insurance Services), credit cards (provided by Creation Financial Services) and travel money bureaux (provided by Travelex). 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.
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.
Distribution
Asda now has 26 distribution 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.
Financial performance
As of March 2009, 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%.
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).
Employee relations
Asda currently has 180,000 employees which it classes as 'colleagues', which is a mixture of full and part-time positions in the stores, depots and head office locations for Asda in Leeds, and George in Lutterworth, Leicestershire.
The company has featured prominently in lists of "Best companies to work for", appearing in second place in The Times newspaper list for 2005. It offers staff a discount of 10% on most items (exceptions include fuel, stamps, lottery, giftcards and tobacco related items).
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 union collective bargaining agreement. Poor relations continued as Asda management attempted to introduce new rights and working practices shortly thereafter at another centre in Washington, Tyne and Wear.
Some compromise was reached by June of that year, when a five-day strike was called off after Asda management and the GMB union reached an agreement.
Relations have improved since, with both Asda and the GMB marking the death of a worker together on Workers' Memorial Day in 2010.
In 2013, tens of thousands of Asda workers across the UK were hit with a tax complication because of an anomaly in Asda's payroll system. Asda employees receive their pay every four weeks, which means that once every 20 years they are paid 14 times a year rather than 13. Whilst most companies handle this properly, Asda's payroll system did not, which meant that workers had, through no fault of their own, paid less tax for the year than they should have. This resulted in most full-time and a small number of part-time workers receiving a demand from HM Revenue & Customs for between £72 to £160.
Marketing
In the 'Asda price' campaign, 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 from 1978, actors Richard Beckinsale, Paula Wilcox and James Bolam. And later, Julie Walters, and football player Michael Owen. In the late 1970s, adverts also included Sitcom actor Leonard Rossiter. In 1980, Carry On actress Hattie Jacques appeared in the advert as a school crossing patrol officer. Between 1981 and 1985, Asda used the slogan 'All Together Better' in conjunction with the 'Asda Price' pocket tap campaign in TV commercials and newspaper and magazine advertisements. When the new green capitalised ASDA logo started to appear from 1985, in early 1986 onwards and until early 1989, two slogans were used. The first, 'You'd be off your trolley to go anywhere else', was replaced in 1987 by 'One trip and you're laughing'. Celebrities including Joanna Lumley, Harry Enfield, Victoria Wood and Julie Walters featured in these adverts pushing their trolleys past Asda counter displays filmed in more 'exotic' locations to show the broad range of fresh food products that Asda offered from countries such as France and Italy.
In 1989, and until late 1991, before the reintroduction of the pocket tap campaign, advertising for Asda had featured the Fairground Attraction song "Perfect" with the slogan 'It 'Asda be Asda', which was based upon the lyrics of the song. When the Asda Price slogan was reintroduced in 1992, the strapline Pocket the Difference (capitalised) was added alongside it. This was replaced by Permanently Low Prices, Forever in 1996. In that same year every single Asda store had a 'rock of value' boulder with this slogan carved underneath the Asda Price Guarantee promise into the stonework positioned at their store entrances. They were removed in 2001, two years after the Walmart takeover and for a while Asda adopted their new parent company's slogan, Always Low Prices. 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, Asda were the sponsors of Sheffield Wednesday F.C. during two seasons in modern times â€" 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 December 1997, the Spice Girls licensed their name and image to Asda for the creation of over 40 different Spice Items for Christmas 1997, including goods such as party supplies, official merchandise, and Spice Girl branded kids' meals in the stores' restaurants. The Spice Girls reportedly earned £1 million from the deal.
In the smiley face "rollback" campaign, also used by Walmart, 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 & Lidl. 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 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 as well as a 'jingle' to some of its adverts, which can also be heard on its in-store radio station 'Asda FM'.
In 2008, the company refocused on price with a "Why Pay More?" campaign both on TV and in stores. Asda TV commercials in April 2009 focused on price comparisons between Asda and its rivals, using information from mySupermarket. 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, but appeared in a 2008 Christmas advert. Asda returned to the former 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 16 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 ASA 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, that the survey did not study low-cost supermarkets such as Aldi, and that their price checker, mySupermarket, 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".
Energy efficiency
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 Sainsbury's at 164.
Ethical trading
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 by country 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. 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.
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". Asda have also refused to sign up to and donate to the Rana Plaza Donors Trust Fund, to donate compensation to the families of workers in Bangladesh killed when their factory building in Rana Plaza collapsed in 2013. Instead, Asda donated an undisclosed sum to the poverty relief charity Building Relationships Across Communities, who in turn pledged around £1.3m to the fund. Campaigners believe Asda is unwilling to set a precedent on indemnity pay for large scale industrial accidents.
In 2009, 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.
Call for boycott
In October 2010, Chairman Andy Bond was a signatory to a controversial letter to The Daily Telegraph, 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 was followed by 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."
Sponsorships
- Asda sponsored English football team Sheffield Wednesday for their 1991 Rumbelows Cup final win against Manchester United. Also, Asda sponsored Accrington Stanley in the 1998â€"99 season.
- Asda sponsored Kwik cricket for Kids.
Charities
Asda supports six main charities through its stores:
- Tickled Pink - Launched in 1996, celebrated its 20th year in 2016, this helps two breast cancer charities â€" Breast Cancer Care and Breast Cancer Now (formerly Breast Cancer Campaign) Since it started, they have raised over £50 million as of 2016.
- Tommy's - funds research to find out why things go wrong in pregnancy and birth, and provides information free of charge
- Children in Need
- Everyman - a campaign charity since 2011.
- Fields In Trust - charity partnership from 2010 - 2012. The Challenge aims to protect outdoor recreational spaces, to create a permanent living legacy of both the Queen's Diamond Jubilee and the London 2012 Olympics.
- Asda Foundation - supporting local causes of Asda store workers, with projects supported across the UK.
Controversies
Dairy price fixing
In December 2007, Asda, Sainsbury's and other retailers and dairy firms admitted to the price fixing of dairy products between 2002 and 2003. The price fixing operation was calculated to have cost consumers around £270 million.
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." In total, Asda was fined £18.21 million by the Office of Fair Trading for its part in the cartel.
False and misleading advertising
In 2010, a national press ad for Asda on a double-page spread was headed "The big Asda Rollback" with headings stating "Lower prices on everything you buy, week in week out" with equal prominence to a column headed "Lower prices than any other supermarket"; that the arrows underneath the heading "Lower prices than any other supermarket" compared prices at Asda with prices at Sainsbury's, Tesco and Morrisons. The ASA ruled that in the context in which it appeared, it was ambiguous in that it could be interpreted either as referring to price reductions that had taken place within Asda or to price comparisons with the named competitors. In addition, because the ad did not explain that the price reductions had not necessarily taken place in the week that immediately preceded the ad, they concluded that the headings which stated the number of price reductions that had taken place in each product category were misleading. The ASA also concluded that the "Lower prices than any other supermarket" claim in the advert was misleading.
The ASA disagreed, and referred to the claim "Everything is at least half price!" was likely to imply to viewers that all toys were included in the sale. As all toys were not included in the sale, and in the absence of a qualifying statement, the ad was misleading.
The ASA ruled that a television advertisement in 2011 for the new Asda price guarantee was misleading in that the small on-screen text that stated "Exclusions apply" was not sufficient to warn viewers that the Asda price guarantee did not apply to non-grocery items.
The ASA also ruled against two national press ads one which showed hardback and children's books and one that showed football related items with text stating "If your grocery shopping could have cost less elsewhere we'll give you the difference - Guaranteed!" Although each advert had "Exclusions apply" and that other text stated "If your grocery shopping could have cost less elsewhere we'll give you the difference", it felt that given the prominent appearance of the hardback and children's activity books and football related items and the prominent appearance of the logo "ASDA Price GUARANTEE" and "Guaranteed!", they considered the footnote and other text referred to above was not sufficient to warn readers that non-grocery items particularly those included in the advertisement were not included in the Asda price guarantee.
Another advertisement from Asda, in which it featured World Cup related products and an Asda price guarantee was misleading as the World Cup related products were exclusive to Asda and not, therefore, available at Morrisons, Tesco or Sainsbury's.
In 2009, the ASA challenged whether a press ad which showed a large green arrow bearing down on a smaller yellow arrow with a crumpled tip and "Asda 2955 products cheaper" should set out how the general price claims made in the ads could be verified by consumers. Because it was not possible for consumers or competitors to check the products and prices used in the comparison using mySupermarket.co.uk, and because the ads did not set out how consumers and competitors could check that information for themselves, the ASA concluded that the ads did not satisfy the criterion of verifiability as defined in the 2006 European Court of Justice ruling, and were therefore in breach of the advertising Codes.
The ASA ruled that, due to the significant limitations and qualifications to the basis of the price comparison which were not included in the ad, or in the terms and conditions on Asda's website, the approach taken in making the comparisons was unfair and misleading.
A press ad, which appeared on 26 September 2011, was headlined "Only one supermarket is ... always 10% cheaper or we'll give you the difference guaranteed". However, at the top of the ad there was a banner that contained the claims "SALE", "Half Price", "Price Drop", "50% off", "1/2 price", "cheap" and that part of the headline claim "... always 10% cheaper" appeared in bold text in the middle of the ad. The ASA considered the banner, together with the headline was likely to be interpreted by consumers as claims that referred to the price of ASDA goods. Since consumers could interpret that claim as one which guaranteed to refund the difference, should ASDA not be the lowest on price, the ASA considered the presence of the claim "only one supermarket is always 10% cheaper" could create the impression that ASDA were always 10% cheaper and would be interpreted as a 'lowest price' claim. The ASA therefore concluded that the advert was misleading. It also noted the footnote explaining the APG contradicted ASDA's absolute claim that they were always the lowest on price, and that the disclaimer was also misleading.
In 2009, a four-page regional press wraparound included several maps and images of a proposed development in New Barnet, and described the benefits the development would bring to the local area. The advert included a development site plan and map, which marked out the proposed Asda store, the existing Sainsbury store and the sites of the proposed, approved and existing Tesco stores. Because it was not clear that the marked-out area relating to the Asda store was for only the store floorspace, whereas the marked-out area relating to the Sainsburys store included store floorspace and additional buildings, and the marked-out area relating to the proposed Tesco area was not based on an approved plan, the ASA concluded the advertisement was misleading.
2013 horsemeat scandal
In 2013, DNA tests revealed that horsemeat was present in Asda's Chosen By You fresh beef Bolognese sauce, the first instance during the 2013 meat adulteration scandal of horsemeat being found in fresh meat.
Award
- March 2009: Voted Innovative Employer of the Year, at the Oracle Retail Week Awards.
See also
- 2007 UK petrol contamination
- European Marketing Distribution purchasing organization
- List of convenience stores
- List of department stores
- List of hypermarkets
- List of superstores
- List of supermarkets
References
External links
- Official website