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Asda reports 5% fall in online sales but says it remains the UK’s second-largest online grocer – with ambitions to be second-largest grocer

Asda promises its shoppers better value and convenience. Image courtesy of Asda

Asda this week says its online sales were 5% lower in 2021 than the previous year, but were still 75% higher than pre-pandemic 2019. The supermarket says it has regained its position as the UK’s second-largest online grocer by market share and now wants to become the country’s second-largest grocer.

The update came as Asda this week gave investors an update on its 2021 figures. In its 2021 full-year, total Asda Group sales increased by 0.5% to £20.4bn, from £20.3bn a year earlier. Sales were 0.6% ahead on a like-for-like basis that strips out the effect of store openings and closures. Sales of homewares, outdoor equipment and clothing drove that growth. Grocery like-for-like sales were 0.5% lower in 2021 than 2020 – but 4.6% higher than in 2019.

Online sales fell by 5% in 2021 compared to 2020, but were 75% ahead of 2019.

Asda operating profit for 2021 came in at £693.1m, 42% higher than the £486.5m it reported in 2020. That, says Asda, was primarily due to a reduction in Covid-related costs compared to the previous year.

In the fourth quarter alone, LFL sales of £5.4bn were 2.9% down on the previous year, but 2.6% up on the same period two years earlier. In December it says it hit its target of providing 1m delivery slots in the week running up to Christmas.

Asda co-owner Mohsin Issa says: “When we bought Asda we were clear that we wanted to grow this great business and our ambition is for Asda to regain its position as the UK’s second largest grocery retailer. We are pleased with the progress made in the six months since we officially took over the business and are confident we can achieve this long-term ambition by providing customers with exceptional value wherever and however they choose to shop with us.”

Statista analysis shows Sainsbury’s staying just ahead of Asda in terms of their share of the UK grocery market in recent years – with their positions briefly reversed in spring 2019 – and their market shares are very close in size. As of January 2022, says Statista, Asda had a 14.4% share of the grocery market in Great Britain, while Sainsbury’s had a 15.6% share, while Tesco remains the clear leader with a 27.9% share.

Asda has launched a new Just Essentials brand, with a range of 300 products, that it says is 50% larger than the Smart Price Range it will replace. The full range will be sold in all 581 of its food shops and online.

Issa says: “We understand that customers are increasingly worried about the cost of living and want help to keep their grocery bills in check, whilst still being able to buy healthy and nutritious food for their families. Our new ‘Just Essentials’ range has been specifically designed with this in mind, combing our lowest prices with a much larger and more diverse range of great value products to meet all household needs.”

Mohsin and Zuber Issa previously founded EG Group, which they own together with TDR Capital, before the partners teamed up again in 2020 to buy Asda as well. The acquisition came soon after Asda had almost doubled its online capacity to 700,000 slots a week during the first Covid-19 lockdown, as the company responded to higher online demand. By Christmas 2021, it had grown online capacity again to a million slots a week.

Strategy of convenience across channels

The retailer has looked to give shoppers more convenient ways to buy as it pursues a target of being the UK’s second largest grocery. It describes its strategy over the last year as being one of giving customers more convenient ways to shop – and more reasons to visit its stores. It has, for example, opened Asda On the Move convenience stores at EG Group fuel stations and plans to roll them out across all EG Group sites in the coming year.

It has also worked with more than 40 different partner brands in more than 1,000 partnership propositions in 400 shops. In the coming year it says it will scale up the partnerships that have proved most successful.

Trialling new approaches

More recently, Asda last week announced a trial that enables online shoppers to communicate with a ‘personal shopper’ in-store, before taking delivery of their shop in as little as an hour. The new service works through on-demand delivery company buymie. Shoppers in one Leeds store can download a new Asda Express, powered by buymie, that has been created for the three-month trial. Customers using the Asda Express customised app will be able to connect with the buymie shopper in store. The service will create an initial 60 jobs, and will roll out further if here is demand.

In a second, parallel, trial, customers at a Bristol store will be able to order via the existing buymie app for delivery in as little as an hour.

At launch, Simon Gregg, senior vice president of ecommerce at Asda, said: “As we look to further expand the number of convenient delivery options we offer, we know that customers are increasingly looking for a more personalised service. The trial in Leeds and Bristol will give access to our full online range and a ‘personal shopper’ experience for bigger basket shops through buymie’s interactive platform.

“By partnering with buymie we are able to offer express delivery in more locations more quickly, without the need to implement new technology, infrastructure or cause disruption to our store teams.”

Devan Hughes, co-founder and chief executive of buymie, said: “With the impact of COVID and the acceleration of online adoption, speedy grocery delivery has become a must-win channel. Today, we are thrilled to be not only launching this partnership with Asda, but also the launch of an entirely new “powered by” enterprise technology.

“buymie is entirely unique in its approach, exclusively championing existing grocery retail brands, and handling the entire fulfilment process end-to-end from order placement, right through to in-store picking and delivery.”

Asda is also extending its Asda Rewards loyalty app trial to customers in 48 shops following an initial 16 store trial. Customers using the Asda Rewards app build up a cashpot as they shop and as they complete in-app missions. That cashpot can then be turned into vouchers to spend in store.

Asda is an Elite retailer in RXUK Top500 research.

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