Asda is a British
supermarket chain which
retails: food, clothing, toys and general merchandise. They
also have a mobile network, called
Asda
Mobile.
Asda
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 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, 12 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.
History
Asda, West Bridgford, Nottingham,
England
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.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.
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. 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.
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 2005, Asda expanded into Northern
Ireland
by purchasing 12 Safeway stores from Morrisons.
In November 2008 there were reports that Asda was to buy Irish
retailer
Dunnes.
In 2009 Wal-Mart 'sold' Asda for £6.9 billion to their
Leeds-based investment subsidiary Corinth Services Limited. 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.
Marketing
Asda is known for memorable famous marketing campaigns. 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
Julie Walters,
Michael
Owen, sitcom actor
Leonard
Rossiter and Carry On actress
Hattie
Jacques. In the late 1980s, 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.
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 stylized 'A',
still producing the 'chinking' sound. This included an advert
during the
2006 FIFA World Cup
featuring the
England
footballer
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 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 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, but appeared in a
2008 Christmas advert.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
The
Grocer magazine "Lowest Price Supermarket" Award for the
past 12 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, and that their price checker, My Supermarket,
doesn't include Morrison's, 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".
Corporate social responsibility
- 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 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.
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".
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.
- Sponsorships
Asda Smart Price
Asda's Smart Price logo
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 Morrison's
Value.
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
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.
George clothing
Asda has its own range of clothing known as
George
which was created in 1990. 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.
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.
Stores
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.
- 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 is currently the largest Asda Wal-Mart
Supercentre by total floor space. The second largest
Asda Wal-Mart Supercentre is located in Huyton
, Merseyside. There are currently 25
Supercentres in the UK.
It is also planned for a Wal-Mart
Supercentre in Dundee
, Scotland.
- Asda Supermarkets
There are 346 Asda Supermarkets.
- 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. In 2008, all George
standalone stores were closed due to high rental costs resulting in
low profitability. The first George standalone store to open was in
Preston.
- 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
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. In
early January 2007 it was announced that the initial trial
Essentials store would close within a month after only 10
months of trading.
Distribution
Asda also has 25 depots all across the UK which distribute across
the network of stores. There are depots for chilled foods, clothing
and ambient products, such as fizzy drinks and cereals.
Other interests
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 ,
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.
- Asda Financial Services
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.
Loyalty card
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". However, the Asda-branded
Credit Card (provided by
Grupo
Santander) offers a points scheme, though these points can be
earned on all spending.
Internet operations
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.
Financial performance
, Tesco has a 31.6% share of the UK grocery market while Asda's share is 17.0%, followed by Sainsbury's at 15.9%, and Morrisons at 11.1%.
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
Spend (£000s)
|
Market Share
August 2008
|
+/- from
July 2008
|
| Tesco |
6,351,531 |
31.6% |
0.3% |
| Asda |
3,410,431 |
17.0% |
0.1% |
| Sainsbury's |
3,175,543 |
15.9% |
0.1% |
| Morrisons |
2,233,137 |
11.1% |
0.2% |
Employee relations
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 (although very few, if any, employees at
grass-roots level were asked for their opinion). It offers staff a
discount of 10% on most items (exceptions
include fuel, stamps, lottery, giftcards and tobacco related
items).
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.
Trade union relations
In August
2005, the manager of the Wakefield
depot read out what were called "foreign-sounding"
names over the public address system ordering them to report
immediately to the manager's office. The workers, who were
all
Muslims, were ordered to produce evidence
that they were not illegal immigrants. At least one was threatened
with the sack unless he produced his passport the next day.
The
highly public initiative by management, which came within weeks of
the 7 July bombings in
London
, was
followed by a spate of graffiti at the depot in Wakefield
expressing hatred and contempt for Muslims and their
religion.
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
GMB represented employee at the Washington
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,
(such as the GMB sending out ballot forms to non union members -
strengthening Asda's claim that the union quoted figures were
inflated,) but after discussion at the
TUC, an agreement was reached for a
national level consultative body and the strike called off.
Dairy price fixing
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.
Asda Mobile
Asda also owns a mobile network called
Asda
Mobile, which was launched in April 2007.
Awards
- 1997–present — Voted Britain's lowest price supermarket in a
survey by Grocer 33 Magazine
- 2001, 2002, 2003 — Voted a top 10 UK employer by the Sunday Times Top 100 Best Employers Survey,
although the merit of Asda being awarded such an award is contested
by the GMB
- 2002 Nestlé Social Commitment Award,
awarded by peers in the food industry
- March 2009 — Voted 'Innovative Employer of the Year' at the
Oracle Retail Week Awards
See also
References
- Cinven - Case studies
-
http://www.belfasttelegraph.co.uk/breaking-news/ireland/business/dunnes-urged-to-clarify-rumours-of-asda-takeover-14033905.html
- " Asda made to drop low price claim",
BBC, 17 August 2005.
- Mintel Clothing
Retailing - UK, July 2005
- Supermarket unveils £60 wedding dress
Telegraph.co.uk. Retrieved 6 October 2006.
- Asda
External links
Video clips
football
team Sheffield Wednesday
during the early 1990s.
, home of English
, home of Welsh
football
team Swansea City and Welsh Rugby Union regional team Ospreys Rugby Club.
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