When the rest of the retail industry is watching you closely, recording continuous growth in sales can only be a good thing. Earlier this week the supermarket giant Asda announced that it has experienced yet another quarter of rising sales, bringing this trend up to five consecutive quarters.
Regardless of the recent downturn, we have seen in sales across the high street, along with the UK heatwave failing to transform into a sales boost as many expected, Asda has recorded a 0.4% rise in their like for like sales which is above the market average. This means it is the first time Asda has outperformed the market for four years.
The majority of sales increases in stores, however, are not coming directly from food sales, but are instead being found to have come from Asda’s ‘Home’ range and clothing line, ‘George’. In the 12 weeks leading up to the end of June, George.com experienced a 25% increase in sales, and the overall online business recorded an increase of 13%.
It is likely that the next quarter will also show high sales figures for both in-store George products and sales from George.com due to Asda’s strong marketing focus on the ‘back to school period’. Branding themselves as the place where you can buy a full school uniform, including shoes, along with all the necessary stationery, bags and lunchboxes, parents are increasingly turning to Asda during this time for convenience as well as the cheaper products. A pair of school shoes in George costs around £20, whereas an equivalent in Clarks, the UK’s biggest distributor of children’s school shoes is approximately £40 (although the question of whether these products are of comparable quality remains to be seen).
These results are likely to increase the issues surrounding the announced merger between Sainsbury’s and Asda in April earlier this year. Considering that both of these supermarkets control significant market shares in the UK and a merger would create a giant supermarket with an estimated value of £15 billion, it is no surprise that this merger is under investigation by the UK competition and market authority. Implications of this merger and the potential of a reduced competition for customers and a monopoly forming must be analysed. It is currently estimated that the merger if it were to go through, would have to sell a proportion of their combined 2,800 stores in the UK. Despite this, it is still likely they would become the new market leader ahead of Tesco.