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Asda signals end to bulk and multi-buy deals

Asda has signalled an end to the multi-buy offers that had become a staple of supermarket shopping, such as three products for the price of two, as it believes many Britons are too poor to buy in bulk.

Britain’s second biggest supermarket chain by market share – reiterating that it was a “clear winner” in the Christmas grocery battle – said shoppers were eschewing bulk buy deals in order to stick to strict budgets.

Judith McKenna, chief operating officer, said: “When you are working on a cash budget for the week, actually you can’t necessarily afford to buy a multi-pack of something when you have got to the end of the week. It may be better value, but you can’t afford it.”

Last January, it offered tinned tomatoes in a bulk buy at four tins for £2, and had sold 1m cans. This January it offered individual tins of tomatoes at 50p each and sold 1.3m.

Asda has been trying to bring down the number of special offers, concentrating instead on offering low prices across the board.

In the 14 weeks to January 7, Asda increased sales from stores open at least a year by 1 per cent, excluding fuel and VAT, helped by its pledge to be 10 per cent cheaper than rivals or refund the difference, and improvements in the quality of its food.

Walmart, Asda’s parent, said UK sales from stores open at least a year rose 0.1 per cent in the three months to December 31, excluding acquisitions and fuel. Asda attributed the difference to the inclusion of the first few days of the new year, when Britons returned to normal shopping habits after the end of the Christmas and new year holiday. Walmart said Asda increased operating income faster than sales.

The sales increase contrasts with a UK underlying like-for-like sales decline of 2.3 per cent at Tesco over the Christmas and new year period.

Andy Clarke, chief executive of Asda, said the group had been gaining market share and had been a “clear winner” at Christmas.

“That means someone is obviously losing. I am sure you can draw your conclusions [as to] who’s losing share, given some of the recent trading updates,” he said.

However, he shrugged off the prospect of a fight back from Tesco.

Tesco is expected to spend hundreds of millions of pounds revamping its stores and hiring staff, with a particular emphasis on fresh food, an area where Asda has been seeking to improve its position.

“We have got a very good plan and we will continue to exploit that,” Mr Clarke said.

Source : Andrea Felsted – Financial Times
www.ft.com/cms/s/0/f8e24198-5cab-11e1-ac80-00144feabdc0.html#axzz1n7t1WbUE

22 February 2012
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