Asda’s own brand continues to drive sales growth

Supermarket Asda has consolidated its strong growth in the first quarter this year with a further boost in sales in Q2, ending H1 on a high compared to last year’s weak comparative.

According to recently released figures, total revenue excluding fuel grew 9.6 per cent in Q2, bringing H1 revenue up to £10.5bn, an 8.7 [er cent increase year on year, with sales growth across food, clothing and general merchandise.

Food was the standout performer, with like-for-like (l-f-ls) sales up 9.8 per cent, while clothing and general merchandise l-f-ls were more moderate, up 6.3 per cent and 2.8 per cent respectively, compared to a 1.0 per cent decline in food sales and 6.7 per cent decline in non-food sales in Q2 2022.

“Just Essentials, Asda’s value range launched last year specifically to help families shop on the tightest budgets, is now firmly established as the number one value range in the market with 20.2 per cent market share and sales during the quarter were 87 per cent up year-on-year. More than 22m customers have now bought Just Essentials products since the range launched in May 2022,” says the supermarket.

“We know that thousands of families continue to struggle with the cost of living, and we’re committed to doing all we can to support them. This quarter, we have locked the price of over 500 everyday items to help families keep a handle on their budgets, as well as reducing the price of over 200 own–label items by an average of 9% – including fresh fruit, vegetables, cupboard staples and ready meals,” Mohsin Issa, Asda’s co-owner said.

Commenting on the figures, Joe Dawson, Retail Analyst at GlobalData, stated that a focus on bringing the best value to customers has characterised Asda’s year so far, with an expansion to its private label range driving 14.7 per cent growth in own brand sales as consumers continue to seek out low prices due to constrained disposable incomes.

“Price drops and locks have continued to appeal, while a campaign to highlight quality that compared products to premium brands will have improved customer perceptions, helping to broaden the grocers appeal to quality seeking shoppers. The supermarket has won a number of Grocer Gold Awards in 2023 for its low prices compared to its direct competitors, highlighting the success of its Just Essentials range.

However the range has now been reduced from 293 to 269 products, perhaps signaling the effect of low prices on margins. In order to continue on its current growth trajectory Asda must focus on maintaining its private label proposition and reducing prices on basics in line with the deflation of commodity prices, said Dawson.