Asda vows to open smaller stores as outlets left frozen out

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Supermarket Asda today vowed to accelerate openings of smaller stores after its out-of-town outlets were left out in the cold during the freezing winter weather.

The firm, which is owned by US firm Wal-Mart, plans to open three small format stores towards the end of March as part of a programme to add 10 stores that will create 6,000 jobs this year.

Asda reported a 6 per cent rise in like-for-like sales for 2009, with sales in the last three months up 4.6 per cent.

Growth was driven by an increase in customer numbers and higher average spend across the year and Asda said it had exceeded its forecasts for both profits and sales.

The supermarket lost out in the snowy weather during its busiest trading period at the end of the year.

Chief executive Andy Bond said the freezing weather was some of the most challenging the firm had ever experienced.

"As you know we have far fewer stores than our competitors, so our 18 million customers have to drive a little further to get to us," he said.

"Not surprisingly this meant the four weeks of snow and ice from December 18 impacted us more than any other food retailer."

Recent figures from Kantar Worldpanel showed Asda lost market share for the first time in more than two years in January.

The group was the only one of the "big four" players to see market share fall last month, to 16.9 per cent from 17 per cent a year before.

Asda, which currently has 371 stores across the UK, now plans to broaden its business with additional smaller supermarkets, which can be located closer to communities.

The firm said the first three openings this year will be in Cumnock, Ayrshire, Kings Heath in the West Midlands and Tweedmouth, in Northumberland.

Asda also wants to capture a greater share of the online grocery market after it saw sales in its home food shopping division increase by nearly 50 per cent last year.

The supermarket said it was "too promotional" in 2009, as it was sucked into ferocious high street price wars.

Mr Bond said falling inflation towards the end of the year had caused suppliers to discount heavily "rather than investing in reducing the base price of their products".

"While we charge a consistent low price every day, all three of our rivals have a high low promotional strategy," he said.

"In my view they are guilty of employing weapons of mass distraction when it comes to pricing. We will no longer get drawn into playing this game."

He said clothing label George had demonstrated its knowledge of the supermarket's customers during the year.

Its men's Moob Tube - a vest to hide chest flab - sold out in hours, while the Tummy Tamer dress was also said to have flown off the shelves.

Mr Bond said George had taken the top market share position in November as measured by volume.

"However, our customers don't really care how big we are, they are more concerned about getting value for money on every purchase," he said.

"In 2010 they are demanding even greater value, and as we start coming out the other side of the recession that means less waste, clear ethical standards and higher quality garments."