With a 40-year heritage in offering value prices, Asda is well positioned to benefit from the economic slowdown. But as its figures show yesterday, the grocer is not just benefiting, it is stealing a march on its competitors.

The Wal-Mart owned grocer is ahead of target, attracting more AB customers while also seeing growth in its Smart Price range. And it has everything in place to continue turning the screws on its competitors.


For its third quarter, Asda reported like-for-like sales excluding petrol up 6.9 per cent – buoyed by food, driven by increased customer numbers and higher basket spend. Asda has managed to position itself as a value retailer for all – whether that’s new customers trading down from Tesco or Sainsbury’s, or existing customers that have traded down with Asda.


Asda financial boss Judith McKenna says customers are increasingly savvy. She says while they might buy from their lower-priced range for staples such as rice and pasta, they will then top up with slightly more expensive cuts of meat.


Asda has also invested about£30 million over the past two years in improving product quality and it claims that in blind tests its own-label is outperforming comparable products from premium-led retailers.


Shoppers have clearly noticed the work that Asda has done on its food products. While everyone would of course love to buy all their food from grocers such as Waitrose, for economic reasons they just won’t let themselves. And if Asda is satisfying their needs, they can live without expensive luxuries for a while.


While McKenna admitted any products that fall under the “discretionary spend” category are having a tougher time, she also said Asda has outperformed all major general merchandise retailers over its third quarter, with strongest growth in baby, music, video and game product areas.


Its clothing brand George also performed exceptionally well. George has already leapfrogged Primark to become the second largest clothing retailer by volume, according to TNS, and has launched a series of “hero” products, such as a£12 little black dress, which have not only captured column inches but have also sold out within hours.


Asda is in a good mood at the moment and it looks likely to only get happier. Its fledgling Asda Direct has been launched without fanfare but will build up speed. The roll out of its home shopping service for food now covers more than 90 per cent of the UK population. Asda is reaching out to everyone and many people are keen to snap goods out of its hands.

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