As the supermarket price war rages on and the Big Four continue to lose market share to discounters, most are choosing to rein back new openings in favour of closing unprofitable stores. However, Asda has this week announced that it will buck this trend by investing £600 million in a new programme of store openings after it managed to reclaim its title of the UK’s second largest grocery retailer during the highly competitive Christmas trading period.
The £600 million investment will see Asda launch a total of 17 new store openings during the current calendar year, three of which are expected to take place in London. In addition, the retailer will remodel 62 existing stores, create 150 new remote click and collect sites and construct 36 new petrol stations – as Asda is widely regarded as the main player in the supermarket fuel stakes due to its price lowering strategy, it seems wise to capitalise upon this.
President and chief executive officer of Asda, Andy Clarke, confirmed the sum of the investment at an event in London earlier this week. Hinting that the plans had received full backing from parent group Walmart, he was keen to show the retailer’s determination to surmount what he called “one of the most challenging and changeable periods in history” for the grocery market.
He continued; “I’m pleased that we can announce our continued investment in the UK with £600 million for new and improved stores in 2015.
“With such a powerful force like Walmart behind us that fully supports our strategy, we’re in a unique position in a difficult market, a position of great strength.
“The first year of our plan was very much about building the foundations – a work out to limber us up for what is to come in 2015 – by leading the price agenda in a deflationary market. We have a clear plan for sustainable, profitable growth that creates a proposition that gives customers what they want.”
Asda has certainly gone a long way in cutting prices recently, with the retailer now claiming that it is at least 8 per cent cheaper than its Big Four rivals. Furthermore, it has managed to half the gap between its prices and those offered by discounters to just 10 per cent in the past two years.
Asda was one of the worst performers over the Christmas trading period, with a 1 per cent fall in like for like sales in the year to the 31st of December in direct contrast with both Tesco and Morrisons which saw their best performances for several years. However, when new store openings in the year to the 4th of January are taken into account, total sales rose by 0.5 per cent – indicating that this new programme of openings may indeed be in the retailer’s best interests.
While no locations have officially been confirmed as yet, it is believed that many of the new openings will take place in London and the South East of England.
