Asda to expand grocery delivery after record online sales

Asda has on Tuesday reported record online sales in its second quarter, covering the period from 1 April to 30 June, as shoppers increasingly relied on the safety of their homes to shop amid the COVID-19 pandemic.

Online grocery sales doubled and click and collect sales quadrupled during the quarter, and Asda said many of these new customers were new to the chain.

The retailer has also revealed its plans to increase its online capacity to 740,000 slots per week by the end of the year. It has already beefed up the online capacity by 65 per cent since March to 700,000 weekly slots.

Asda added that it aims to offer up to one million slots per week in 2021. It has also announced the expansion of its delivery partnership trial with Uber Eats to 25 more stores over the next eight weeks and resumption of its same day and express click and collect service at more than 300 stores.

“The pandemic has created a structural shift in customer behaviours towards grocery shopping. We have accelerated our online capacity expansion to meet levels we had anticipated reaching in eight years within a matter of weeks and we will continue to expand this offer,” commented Roger Burnley, Asda chief executive.

“We will also maintain focus on ensuring our in-store experience delivers what customers want from a shopping trip – great value, relevant range and ease.”

Asda’s like-for-like sales excluding fuel increases by 3.8 per cent year-on-year during the quarter.

“Excluding fuel, Asda’s performance demonstrated the resilience of the business with growth in a challenging period,” commented Doug McMillon, chief executive and president of parent company Walmart.

Walmart has also posted its biggest-ever growth in online sales which helped the retailer trounce Wall Street expectations for quarterly profit and like-for-like sales.

The results showed that the unprecedented spike in demand seen by big-box retailers at the peak of the coronavirus lockdowns has remained strong even as restrictions ease, with US shoppers using their stimulus checks to shop for discretionary items like sneakers and clothes. This also helped Walmart reduce the number of markdowns or discounts.

“The health crisis has created … both tailwinds and headwinds to our business,” said chief financial officer Brett Biggs on a call with investors. “In Q2, we saw stronger-than-expected sales due in large part to stock-up buying and stimulus spending, but the duration and extent of future government stimulus remains uncertain.”

Despite recording $1.5 billion in COVID-19 related expenses, that include higher wages and bonuses for employees, Walmart said its margins improved in the quarter, helped by stimulus checks that had consumers spending on bigger ticket items like home furnishings and apparel.

Walmart’s online and grocery businesses have been bright spots, seeing rapid growth as it expands same-day delivery options and pick-up services. Its US online sales rose 97 per cent in the quarter.

“The e-commerce sales beat what we expected, yes,” said Huntington’s Hare. “But big picture, companies positioned for curbside pickup and online sales are the ones that are going to benefit. Walmart is one of those companies.”

Walmart Plus, or Walmart+, touted as a rival to Amazon’s Prime subscription, could upon its launch also be a way to attract new customers and turn them into loyal shoppers, analysts said.

Executives on Tuesday said it was still working towards the launch of the service.

Operating income rose 8.5 per cent to $6.1 billion in the quarter, while adjusted earnings per share of $1.56 also topped the average estimate of $1.25.

(With Reuters Inputs)