Retailing | 4:23 February 18, 2010 | Sam Andrews | Print this story

'Boring' Asda plans to revitalise

Asda has become “boring”, according to senior executives, and will use parent Wal-Mart’s full-year update today to outline plans to revitalise its performance.

The admission, which followed a poor Christmas at the chain, was reported in a note by analysts from JP Morgan, who attended a supplier event last week, according to Retail Week magazine.

“Asda is unhappy about its latest under-performance and believes this is due to the high level of promotions in the sector which clouded its every day low-price image,” the JP Morgan note said. “Management said they became boring with innovations in-store and the weather had a negative impact on its big store format."

The broker said Asda intends to address the issue “by effectively ordering suppliers to reduce the level of promotions in the UK” to restate its commitment to Every Day Low Prices. It also wants to run more events such as “The Big Night In” to generate excitement and to create more of a “carnival” experience in-store to keep children entertained.

JP Morgan also said the grocer had found that its range rationalisation had gone too far. When, for instance, it reduced a range from 100 to 70 items, 40 would sell quite well but the remaining 30 had limited appeal to customers despite improving the company’s cost base. The retailer therefore plans to re-expand ranges where necessary.

Asda would also look to grow sales through opening around 100 smaller stores in the next three to five years. It has historically operated from large-format outlets but now believes growth would come from smaller shops, online and non-food.