Asda still set to expand even as revenues slow
ASDA, Britain’s second largest supermarket, said yesterday that it would continue to carry out an “aggressive” growth strategy building more stores, as it reported a slowdown in second quarter like-for-like sales.
Grocers like Tesco have called an end to an era of rapid growth known as the “space race”, turning their attention instead to online, as well as building smaller, convenience-led stores.
However, Asda chief executive Andy Clarke denied that it was the end of the space race and said the group would continue to invest in opening stores “of all sizes”.
“I don’t agree that larger space is no longer appropriate. It depends on the market and whether the market is appropriate,” Clarke said.
“We are not committed to low return space like some of our rivals.”
He conceded that a smaller proportion of these would be over 25,000 to 75,000 square feet. The group will open a total of 369,000 square feet of space this year.
Unlike its competitors, Asda does not intend to roll-out convenience store formats in town centres.
Asda’s head of property and multi-channel Karen Hubbard said the group was making shopping more “convenient” accelerating its investment in home delivery and click and collect, with plans to have nearly 250 click and collect pick-up points by the end of the year.
“We believe collection will be as big as delivery in the next couple of years,” Hubbard said, adding that the service will help Asda to expand into areas where it is underrepresented like London and the south east.
Her comments came as the group reported like-for-like sales growth of 0.7 per cent for the 12 weeks to 5 July, a slowdown on the 1.3 per cent growth in the first quarter of the year.
Clarke said its £100m investment into bringing down the price of essentials like milk had weakened like-for-like sales but contributed to higher volume growth.