Asda refocuses on price and customer experience following failed Sainsbury’s merger

Asda

Asda is picking up where it left off following the failed merger with Sainsbury’s, however it says this will likely be at a much slower pace than if the deal had gone ahead.

In the first address to company since the Competition and Market Authority’s (CMA) decision to block the move, CEO Roger Burnley said there will be no change in strategy going forward and Asda will focus on “winning on price, delivering consistent customer experience and driving growth where customers care”.

However, while Asda has had seven consecutive quarters of growth, Burnley acknowledged trends are “accelerating faster than expected” and said it would be harder to deliver its strategy at the same pace without the synergies that the merger would have provided.

“Forget the language of Plan A and Plan B – there has always been one clear strategy for Asda,” Burnley said. “It requires momentum in the short term, growth in the medium term and sustainability in the long term…we need to prioritise and focus on what will make a difference to customers versus what won’t.”

The competition watchdog blocked the £7.3bn mega-merger between Asda and Sainsbury’s last month, ruling it would leave shoppers “worse off” due to increased prices in store and online. It believed there would be a reduction in the quality and range of products and deliver a poorer overall shopping experience.

Asda is arguably in a stronger position than Sainsbury’s following the ruling given its clear value proposition. Sainsbury’s, meanwhile, will need to re-establish its position in an ever competitive market where it sits somewhere in the middle, neither a discounter nor a premium grocer.

According to YouGov’s BrandIndex, Asda, on a score of 25.5, ranks third for value behind Aldi (52.7) and Lidl (47), while Sainsbury’s is seventh with a score of 9.6. However, Sainsbury’s wins on quality, impression and satisfaction, giving it an overall score of 31.2 compared with Asda’s 18.8.

READ MORE: The branding conundrum – Balancing Sainsbury’s quality messaging with Asda’s focus on value

Burnley said Asda will “accelerate” its price position, as well as continue to invest in technology to ensure it provides a “consistent and trusted” customer experience and “hassle free” shopping.

This will include a test on same-day delivery on groceries, as well as further rollout of its mobile Scan and Go, which it launched in 25 stores last week, and additional click and collect collection locations.

It is also turning its Stevenage store into a “tech store” where a range of new technology solutions will be implemented to help it understand how different technologies work together and where the benefits are.

Addressing the speculation that parent company Walmart is thinking about putting Asda on the stock market, Walmart boss Judith McKenna said: “Walmart does not have a one size fits all approach to operating its international markets, but a consistent focus on strong local businesses powered by Walmart.

“However, she confirmed that “while we are not rushing into anything, I want you to know that we are seriously considering a path to an IPO – a public listing – to strengthen your long term success.”

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