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Asda Stores’ Business and Management

Asda Stores (UK) is a subsidiary of one of the United Kingdom’s largest supermarket retailers, Asda Group plc, which also operates Allied Maples Carpet and Furnishing Stores and Gazely Properties, a commercial property development company. The company also retains a 25% stake in MFI, a furniture retailer, resulting from a management buy-out of the company back from Asda in 1987 after an unsuccessful merger.

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Asda Stores led in the development of the superstore concept in the United Kingdom. The basic concept of the Asda superstore is a free-standing unit with a large, generally over 25,000 ft2 or 2,323 m2 sales area, operating away from conventional shopping areas and offering free parking and low-price petrol as additional customer incentives. Asda stores carry a large selection of food and related nonfood products, toys, clothing, and footwear.

The stores currently stock 30,000 product lines, considerably more than its competitors (e.g., J. Sainsbury stocks approximately 14,000 product lines and Tesco markets 18,000 lines). Private label products account for approximately 32% of Asda’s grocery lines compared to 55% at J. Sainsbury (Asda Group ple. 2008).

Asda was originally established by a group of farmers north of England seeking wholesale and retail outlets for their milk. By 1960 a chain of small shops had been established, but they soon became affected by the growth of multiple chains in the grocery business. In 1965 the company joined with a local butcher to form a stores division (Associated Dairies) and expanded into the more profitable grocery sectors. Soon after, Asda acquired the Parkview-GEM discount stores, which provided the company with larger stores (average floorspace of 58,000 ft2 or 5,357 m2) compared to an average of 4,000 ft2 (372 m2) of floorspace during that period ( Davies and Sparks 1986).

These new stores also provided Asda with the opportunity to gain experience in volume trading. During the 1970s Asda made great strides in U. K. retailing. There was no centralized warehousing and their larger stores allowed them to creatively warehouse merchandise and experiment with various space allocation techniques. By moving to vertical stacking in warehouse areas with a higher ceiling and using caging and pallets on the sales floor, they were able to reduce the ratio of warehouse space to sales space from 50:50 in 1974 to 20:80 in 1979 ( Davies and Sparks 19865).

Also, the uniformity of the stores facilitated standard pricing, which saved management resources while pro-. viding promotional advantages. Constraints on growth in their established market during the late 1970s led to Asda’s expansion into other areas of retailing and the acquisition of Allied Carpet Stores (Asda Group ple. 2008).

At the end of 1990s, Asda was faced with strong competition and market decline. In order to meet changing expectations and demands of its customers Asda restructure its stores. The third part of Asda Stores’ strategy involves the revision of the company’s store base and the development of new store formats. These changes will help create a new “image” for the store and its products. This new image will consist of a strong architectural entrance (a huge glass “A” for ASDA) and skylights that will allow daylight into the store interior. Food space will be increased and the quality and presentation of fresh foods will be improved.

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Asda’s management believes that fresh foods offer a potential for growth, and improved lighting and display will be used to highlight the area. The clothing, home, and leisure product ranges will be positioned to be consistent with consumers’ weekly food shopping trips. The “George” range, sourced through the George Davies Partnership, is being positioned in the leisure and children’s market, where there is significant growth potential. A new discount format (Dales) is also being introduced. Dales is a return to Asda’s “core” positioning as the store that meets the weekly shopping needs of ordinary working people who demand value for money.

Asda’s mission is “to become the UK’s leading value for money grocer with an exceptional range of fresh foods together with those of clothing, home, and leisure products that meet the everyday needs of our target customers” (Asda Annual Report 1992). These target customers are ordinary working people and their families whose weekly shopping needs Asda is trying to meet. The reestablishment of Asda’s reputation on price is at the heart of its strategy.

Product ranges and prices will be matched to the needs of the people in the communities surrounding each store. Asda. will take a “back to basics” approach to pricing, with prices at its new Dales store reported to be set at 3% to 4% below the competition ( Mitchell 1992). In its move toward a better price position, Asda must also cut back its own label and nonfood space to allow for more promotion of national brands. Productivity improvements will be concentrated in the areas of personnel, logistics, and information technology.

These are wise choices, given that industry analysts speculate that the greatest performance improvements are likely to come from the tightening of internal operating procedures through the development of technology. Over one thousand positions were eliminated at Asda in 1991 and a wage freeze is in place. Greater productivity gains are likely to result from Asda’s utilization of technology such as electronic point of sale to improve customer service and control wage cost.

Asda also operates a centralized distribution system consisting of eight depots. Technological advances on the order of multitemperate distribution depots and vehicles have helped increase productivity by facilitating frequent deliveries of varied products, assuring freshness and availability (Graves 998).

It will be distinguished from other discount operations by its tight range of approximately 7,500 lines, which will focus on those items most frequently purchased by shoppers, and by its large range of fruits and vegetables. In order to remain competitive, Asda must maintain its strategy in light of international social, political, and economic developments. Like most U.K. retailers. Asda’s foreign growth has been conservative.

A recent analysis of the U.K. retail industry notes that the U. K. grocery market is set to become increasingly more competitive throughout the 1990s. Diversification is expected to become an important element in strategy formulation, given the changes presently occurring in the European Economic Community. Asda must position itself to take advantage of any opportunities that may present themselves.

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A shift in channel captains, from the mass manufacturers to the mass retailers, is a shift toward consumer power. Retailers in the United States have emerged from a decade of “sameness” to a decade of “differentiation.” It is in the hands of the strong national chains such as the Limited and the Gap to recreate the excitement of consumption, which was lost during the 1990s era blandness created by nationally known brand names.

Works Cited

Asda Group ple. 2008. Annual Report. Web.

Graves David. Staff Scheduling and Customer Service at Asda. International Journal of Retail and Distribution Management 18 (1998):17-18.

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