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ASDA Stores Limited
Company typeSubsidiary
IndustryRetail
FoundedLeeds, England, UK (1965)
HeadquartersLeeds, England, UK
Key people
Andy Bond, Chief Executive
ProductsGrocery, General merchandise, financial services
Revenuesee Wal-Mart
£638m
Number of employees
143,126
ParentWal-Mart
ASDA's Headquarters, ASDA House in Leeds

ASDA is a chain of supermarkets in the United Kingdom offering food, clothing and general merchandise products. It became a subsidiary of the American retail giant Wal-Mart in 1999,[1] and is currently 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. As of January 2006, there were 21 ASDA/Wal-Mart Supercentres, 243 ASDA superstores, 37 ASDA supermarkets (including town centres), 5 ASDA Living stores, 10 George clothing stores and 24 depots (distribution centres) - 340 in total. ASDA has 150,000 employees, who it refers to as "colleagues" (90,000 part-time, 60,000 full-time). The company is also engaged in property development through its subsidiary company, Gazeley Properties Limited.

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.

Unlike other major British Supermarkets, ASDA's marketing promotions have been based usually solely on price, with ASDA now advertising itself under the slogan Britain's Lowest Priced Supermarket, 11 Years Running.

History

Asda, West Bridgford, Nottingham, England

ASDA Stores Limited was founded as Associated Dairies & Farm Stores Ltd in 1949 in Leeds. The formation 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 capitalized.[2]

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 Ltd, 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 [3], meaning that ASDA today has no connection with one of the firms its name was derived from.

File:Holtparkasdaleeds.jpg
A smaller ASDA Branch in Holt Park, Leeds

With its stores mainly based in its northern home base, the newly focused food retail group expanded further south in 1989 by buying the large format stores of rival Gateway Superstores for £705m. This move overstretched the company and it found itself in deep trouble trying to sell too many different products.[4] Resultantly forced to raise money from shareholders in both 1991 and 1993, it was 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.[5]

The ASDA store in Shrewsbury, Shropshire, was acquired from the former Safeway plc.

When Norman left to pursue his political career he was replaced by Leighton. Wal-Mart wanted to enter the UK market so CEO Bob Martin lobbied UK Prime Minister Tony Blair on planning issues.[6] Asda, which at the time owned 230 stores and was in competition with Kingfisher plc, was purchased by Wal-Mart on July 26, 1999 for £6.7Bn.[1]

Since the takeover ASDA has continued to maintain its headquarters at the then newly opened "ASDA House". ASDA House 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 from 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 the same year, ASDA expanded into Northern Ireland by purchasing 12 Safeway stores from Morrisons.[7]

Dairy scandal

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 £260M. [8]

Store formats

ASDA originally had a "simple and fresh" store format, which under Archie Norman's team and the focus on a Wal-Martesque strategy became even more so. 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. 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. Milton Keynes store has opened since then and is the largest ASDA Wal-Mart Supercentre. There are currently 21 Supercentres in the UK.

An Asda Petrol Station sign in Great Yarmouth, Norfolk

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.

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 in Cortonwood (Barnsley), Altrincham, Byker (Newcastle-upon-Tyne),Dartford, Tottenham hale, Lincoln, Thurrock (Essex), Glasgow, Leeds Crown Point and at Yorkgate in Belfast. Tesco is also trialling a similar format, "Homeplus", in Denton, Greater Manchester as well as in Bristol. ASDA has also opened a number of stores containing its George range only in several city centres.

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.[9] In early January 2007 it was announced that the initial trial Essentials store would close within a month after only 10 months of trading[10].

In 2004, the George clothing brand (see below) was extended to a number of standalone George stores on the high street. The George label is named after George Davies, founder of Next, who went on to set up the Per Una clothing business for Marks & Spencer. George stand-alone stores are all to close within the next 12 months due to high rent causing poor returns. Instead, ASDA are going to focus on opening 10-12 new Asda Living Stores in 2008.

The interior of the Asda store at Liscard, Merseyside, taken from the store's staff and visitor reception area.

Market share

As of February 2007, Tesco had 31.4% of the UK grocery market while ASDA's share is 16.8%, followed by Sainsbury's at 16.5%, and Morrisons at 11.0%.[11]

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).[12]

Supermarket Consumer
Spend (£000s) 		Market Share
20 April 2008 		Change
Tesco 6,336,887 31.1% Decrease 0.3%
ASDA 3,444,410 16.9% Increase 0.1%
Sainsbury's 3,265,244 16.0% Decrease 0.4%
Morrison's 2,317,304 11.4% Increase 0.3%

Marketing

ASDA is known for two famous marketing campaigns. In the "ASDA price" campaign, [3] 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. Hattie Jacques featured in adverts for Asda in the early 1980s. 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 bounces 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 is challenged by competitors, especially Aldi. Currently in Asda advertising is a theme featuring singing children 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 has included an advert during the 2006 FIFA World Cup featuring the England footballer Michael Owen in an advert with the children singing Vindaloo. The latest advertising campaign has done away with the rollback hook in favour of featuring celebrities Victoria Wood and Paul Whitehouse(amongst others) working as ASDA employees.

ASDA has been winner of the Grocer Magazine "Lowest Price Supermarket" Award for the past 11 years[13], 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[14] 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. As a result ASDA no longer cites itself as "Officially Britain's lowest priced supermarket", instead using "Winner: Britain's lowest price supermarket award".

For Christmas 2007 ASDA reintroduced the "That's ASDA price" slogan [4] as well as the infamous 'jingle' to some of its adverts although this was overshadowed by the celebrity endorsed "There's no place like ASDA, LULZ".

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 February 2008 focus on price comparisons between ASDA and its rivals, using the "Why Pay More" slogan and old Dad's Army theme tune. The old ASDA jingle has once again been removed. adverts.

ASDA advertising slogans

"That's ASDA Price!"
"Permanently low prices forever"
"All together better"
"Always LOW prices...ALWAYS"
"More for you for Less"
"There's no place like Asda!"
"Why pay more"
"Always happy to help"
"Aiming to be Britain's best value retailer exceeding customer needs...always"
"Best for less"

Sponsorship

Employee relations

ASDA 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)[16]. It offers staff a discount of 10% on most items (exceptions include fuel, stamps, lottery, giftcards and tobacco related items)[17]

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 George 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 videogames had been included in the discount day, but were not reinstated with the rest of the discount after Asda backed down.[18]

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.[19]

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 employee at the County Durham depot.[20]

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, Lymedale (in Staffordshire), Lutterworth, Portbury, Skelmersdale, Teesport, Wakefield, and Washington.[21] ASDA threatened legal action, citing flaws in the ballot process, but after discussion at the TUC, an agreement was reached for a national level consultative body and the strike called off.[22]

Online

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 will 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.[citation needed] 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. This new venture is part of its online business, with more than 3,000 domestic and home electrical products. Asda's long term ambition to capture 5% of the £1.9bn 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.

Asda Smart Price

Asda Smart Price is a no-frills private label trade name. The range is in many ways the UK equivalent of the generic brands in US stores. The equivalents from the other of the big four supermarkets are Tesco Value, Sainsbury's Basics and Morrisons 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 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 Cheapest On Display) 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 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. 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.

The Smart Price brand name even has its own groups (or fan clubs) on MySpace and Facebook.

Asda reduced the price of a pack of Asda Smart Price 8 thick pork sausages to 16p meaning each sausage was 2p. It made the headlines in June 2008 as it was during a credit crunch with higher food prices and a higher cost of living.

George clothing

Asda has its own range of clothing known as George which was created in 1990[23]. This is marketed as quality fashion clothing at affordable prices. Wal-Mart also sells the George brand in Germany, the United States, Canada and South Korea. 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 US and Germany. Mintel estimate that George is the fourth largest retailer of clothing in the United Kingdom, after Marks and Spencer, the Arcadia Group and Next.[24]

Staff at ASDA House, its Leeds headquarters, are asked to take part in what is called 'George Day', a non-uniform day when they must wear at least one item of 'George at Asda' clothing.

Asda was the first supermarket to stock wedding dresses. Part of the George line, they had cost just £60. Adult bridesmaid dresses ranged between £30 and £35, at launch.[25]

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 GE Capital Bank) and loans (provided by The Funding Corporation).[26]

  • 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

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.[27]

See also

References

  1. ^ a b "Wal-Mart buys ASDA in UK retail shock". Eurofood. June 17, 1999. {{cite web}}: Unknown parameter |accessadte= ignored (help)
  2. ^ "1920 to 1960 - In the Beginning". All About ASDA. ASDA. 2005. Retrieved 2008-03-27.
  3. ^ Cinven - Case studies
  4. ^ "ASDA/WAL-MART - A Corporate Profile". Corporate Watch. Retrieved 2008-04-06.
  5. ^ "Allan Leighton". Management Today. 25th August, 2005. Retrieved 2008-04-05. {{cite web}}: Check date values in: |date= (help)
  6. ^ "Wal-Mart "lobbied Blair over planning" before ASDA buy". Talking Retail. 28 Jan 2008. Retrieved 2008-04-06.
  7. ^ "Asda acquires 12 NI Safeway stores". Northern Ireland News. 6 June, 2005. {{cite web}}: Check date values in: |date= (help); Unknown parameter |accessadte= ignored (help)
  8. ^ "Dairy Price Fixing Firms Fined Millions". Sky News. 2007-12-07. Retrieved 2008-02-18.
  9. ^ Finch, Julia (2006-12-05). "Asda's new stores prove not-so-Essential in the discount market". The Guardian. {{cite news}}: Check date values in: |date= (help)
  10. ^ "ASDA Essentials trial continues despite store closure". IGD Retail Analysis. 2007-01-09. Retrieved 2007-01-11. {{cite web}}: Check date values in: |date= (help)
  11. ^ "TNS Worldpanel Grocers Share of Trade". Great Britain Consumer Spend - 12 Week Summary to 28 January 2007. Taylor Nelson Sofres plc. 2007. Retrieved 2007-02-18.
  12. ^ "Tesco 'top' in more parts of the UK". BBC News. Retrieved 2008-05-22.
  13. ^ "ASDA keeps title as cheapest UK supermarket", Guardian Unlimited, 9 June 2007.
  14. ^ "Asda made to drop low price claim", BBC, 17 August 2005.
  15. ^ "ASDA Kwik Cricket". EBC. Retrieved 2008-06-30.
  16. ^ Asda
  17. ^ Asda Jobs: Rewards and benefits
  18. ^ "Stingy ASDA bosses cut staff perk". ASDA Watch news article. ASDA Watch. 2006. Retrieved 2007-02-28.
  19. ^ Barrie Clement, "Asda managers told Asian staff to show passports", The Independent, 14 December 2005.
  20. ^ "Asda Wal-Mart guilty of anti-trade union activity", Food & Drink Europe, 14 February 2006.
  21. ^ "Five-day strike by Asda workers", BBC News, 22 June 2006.
  22. ^ "Asda industrial action called off", BBC News, 29 June 2006.
  23. ^ "Superbrands case studies: George". Brand Republic. 2006-04-18. Retrieved 2008-06-30.
  24. ^ Mintel Clothing Retailing - UK, July 2005
  25. ^ "Supermarket unveils £60 wedding dress," Telegraph.co.uk, [1], last accessed 6 October 2006
  26. ^ Sarah Butler and Christine Seib, "Asda ends Scottish Widows tie-up," The Times [2], last accessed 6 October 2006
  27. ^ Clean Up Fashion; Asda Walmart, Page retrieved 23 November 2006.
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