Asda poised to accelerate small format store openings

    Asda poised to accelerate small format store openings

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    plans to open 100 smaller format stores in the next three to five years, according to analysts at JPMorgan.

    In a note published yesterday, JPMorgan said Asda set out the plans at a supplier conference last week.

    The UK’s second-biggest supermarket also intends to open 150 non-food stores, in what would be an acceleration of the roll-out of its Asda Living format, JPMorgan said.

    Asda, the UK arm of US retailing group , declined to comment.

    Asda is expected to outline plans for its next stage of growth tomorrow, when its parent Walmart publishes fourth-quarter results and Asda also updates on its performance.

    It is expected to put more emphasis on smaller format stores – although it will say this is not a convenience chain – online shopping, and utilising Walmart’s buying power to cut costs.

    JPMorgan said Asda believed 75 per cent of its growth would come from smaller stores, online and non-food.

    “Asda said that in the next five years, it wants to be the clear number two in food and number one in non-food, which means it would have to double sales in non-food in the next five years – a lofty goal we believe,” JPMorgan said.

    Until now, Asda’s experiments with smaller stores have not been successful. It ditched its George clothing stores and 8,000-12,000 sq ft Asda Essentials stores, which sold primarily own-brand goods. It is continuing to open Asda Living stores, but the pace of expansion slowed.

    Greg Lawless, analyst at Collins Stewart, said accelerating the roll-out of smaller stores would be “a significant shift of gear for Asda. This all comes back to the fact that they are one-dimensional in format and price”.

    Source: Financial Times