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Asda: Extending convenience

Following Asda’s announcement that it plans to increase its online turnover to £3bn over the next five years, Emma Herrod spoke to Kieran Shanahan, the retailer’s Multichannel Operations Director, about web sales and its expansion of Click and Collect.

MULTICHANNNEL Is vital to Asda and to its customers since, says its Multichannel Operations Director Kieran Shanahan, it’s “where our customers want to shop”. It brings the best of store and digital together, he explains, and is one of the ways in which the firm is aiming to raise online revenue to £3bn by 2018 from its current level of just over £1bn.

When Asda outlined its priorities for the next five years recently, it was clear that the online business remained at the heart of its growth strategy with plans to increase the number of Click and Collect points from all 572 stores to 1,000 locations.


Asda says it wants to build on its position as the UK’s leading value retailer and aims to do so by improving its core business, extending its reach and expanding the brand into new markets. Its strategy includes investing £1bn in lowering prices by a significant margin and £250m in increasing quality, style and design. It is also going to open new stores and expand its Click and Collect service to widen access to the brand from 53% of the UK population to 70%. Click and Collect has already proved to be a win:win service, attracting new customers to its online platform and its stores.

The £1bn it is putting into lowering prices as well as the other investments detailed are being funded by operational savings and by its parent, Walmart’s, global buying power. It is all part of the retailer’s aim to widen the price gap between it and the other three big supermarkets, thus reinforcing its commitment to deliver ‘Every Day Low Prices’, while bringing it closer to value discounters, such as Aldi and Lidl, which have prospered in the recession.

Asda has set its sights on breaking into parts of the UK where its market share is low but customer demand is high, with a particular emphasis on London and the South East. “47% of the population don’t have access to an Asda store,” says Shanahan. Plans include expansion of its supermarket format and growing its number of standalone service stations. It will also continue innovating in its large stores such as building on the George 21 concept and a pilot which will see eight Barclays branches opening in store from early 2014.


Extending the store estate and increasing footfall is not necessarily the future for Asda. Over the past year, it has been trialling new fulfilment options that mean customer don’t have to do pick-ups from a store or wait at home for a delivery. The latest trial, with Transport for London (TfL), is a bid to engage with commuters in its target South East market. Since late November, customers have been able to pick up their grocery order from one of six London Underground car parks. The world-first service means they can order their groceries online before noon and collect them from 4pm at the car parks at East Finchley, Harrow and Wealdstone, High Barnet, Highgate, Stanmore or Epping stations.

The retailer believes that the tie-up with TfL will alleviate the need for commuters to carry produce from premium convenience stores with them on their commute home. Since the produce is being delivered by an Asda van, which will be waiting for commuters at their chosen time, the groceries are kept at a controlled temperature and the driver is on hand to answer questions or assist with transferring bags to the customers’ cars.

The TfL pilot is the latest in a series that has been driven by customer feedback and what the company has learnt since starting a grocery order collection service from a ‘Drive To’ point in the car park of its Queensferry store in late 2011. In the Drive To trial, Asda has tried to deliver a hassle-free experience for customers, with grocery orders taken out to their cars when they arrive. It now operates these collection points at 300 stores, and they’re paying back at a level greater than expected for the company and customers; on average the service is saving an Asda shopper 40 minutes on their weekly shop. The company also started testing a ‘Drive Thru’ option in York in 2013 that enables customers to collect both grocery and general merchandise orders.

They can also pick up their grocery order from three Asda service stations – one in Rugby, one opposite its head office at Leeds Bridge and one in Sale, which also has temperature-controlled lockers to test a selfserve option. The service stations include a temperature-controlled area which keeps frozen, refrigerated or dry goods at the optimum temperature. “With Click and Collect we can be where the customer wants us to be,” says Shanahan. Grocery collections have also been combined with a non-food collection point at an Asda Living store. Outside of the Asda store estate, a standalone collection unit has been operating at Green Park Business Park in Reading since late 2012. It has passing traffic of up to half a million people a week and has been performing well, according to Shanahan, with a reported “strong return rate of customers using the service”. Trials of other formats and different types of locations have evolved for grocery collection throughout 2013 to include a Park and Ride just outside Nottingham.

Shanahan says he has been impressed by the different Click and Collect trials, particularly the ones at service stations, and how the same-day cut off options have been working. “We didn’t expect them to do as well as they have,” he says. “Reading Business Park has done really well and that was a real test for us.” “The next evolution is targeting busy commuters,” adds Shanahan. But the company will also be exploring other places and formats, such as other transport locations, areas where people spend their leisure time, as well as universities and schools. “Lockers are part of the future as well,” he says. “London Underground seemed like a prime opportunity for us,” explains Shanahan. He says Asda is delighted with how the trial is going so far as it is generating awareness and lots of interest and that interest is converting into orders. He adds: “Online is a means for customers who don’t live close to a store to access the Asda brand.”


According to Shanahan, Asda plans to have more than 1,000 Click and Collect locations by 2018, including its existing Click and Collect grocery desks which are being rolled out to all 572 stores and the 300 store car park pick-up locations. But he believes that the company will “go beyond 1,000”. It plans to roll out to all of its stores and then go from there, he explains. “It’ll be led by the customer,” he adds, “since convenience is as important as price for customers when choosing where and how to shop.”

As well as expanding trials – “some aggressively,” according to Shanahan – Asda will be developing or refining those that work best. “We’re keen to see how they work over Christmas,” he says, explaining how the retailer saw a spike in Click and Collect orders in the run-up to Christmas 2012. The location of the Click and Collect desk in-store and the outdoor locations is vital, says Shanahan, and “not off the beaten track”. He confirms that the “ability to fulfil is also key”.


Picking orders in-store is not new to Asda since it has been doing this since it began a home shopping service in 1998. Customers have also been able to collect online purchases from the company’s general merchandise site and fashion site at all of its 572 stores since 2011. In fact, in 2012 the company passed a Click and Collect milestone with more non-food orders collected in store than delivered to customers’ homes: more than 50% of general merchandise orders and more than 70% of orders were collected in store.

Grocery Click and Collect was introduced in 2012. By the end of the year it was available in 100 stores and it’s now offered at 300 locations. As with other retail sectors, Asda has been pushing cut-off times for store collect and delivery of orders since 7% of orders are amended between 10pm and 11pm. Most of its recent Click and Collect points enable customers to order and collect the same day, or like the London Underground trial, order by 1pm and have their order picked in store and delivered to them from 4pm, explains Shanahan.

He says that Asda is continuing to push the market on speed of delivery and deadlines, adding that for the firm “extending cutoff times is key”. Same-day collection also completely changes the notion of convenience for online customers, he comments. “We want to extend that to more people and services in 2014.”


The front- and back-end technology behind Asda’s Click and Collect service is led by Walmart in the US, although the programme is led by the UK with companies within the Walmart group sharing ideas and knowledge. So will the three sites run by Asda in the UK – fashion, grocery and general merchandise – be integrated in terms of site or fulfilment? “We’re definitely exploring this but we do sell a decent range on the grocery site,” comments Shanahan. “We’re actively working on integrating and using traffic across all three sites,” he adds, but says that each type of purchase has a different journey. The reality, says Shanahan, is that Asda is led by its customers and what others are doing, but the company is running a couple of trials integrating fulfilment of George, general merchandise and grocery orders.

As to the future, Asda has a big target to hit if it wants to triple its online turnover in 5 years. But the retailer clearly knows what it’s doing, it knows what its customers want and is busy exploring ways to boost convenience and make itself more accessible both to existing customers and new ones. Already, Click & Collect accounts for 5.5% of all home shopping sales and more than 30% of those orders are placed via mobile. Walmart has proved itself a force to be reckoned with in the past and it won’t like the long-term prospect of its UK supermarket chain being knocked off the number two grocery retailer spot by Sainsbury’s , nor the influx of discount supermarkets to the UK market in recent years. So watch out for more innovation, aggressive expansion on the back of trials all the way up to full implementation – and Asda coming to a street/train station/university/car park near you, some time soon.

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