Asda 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 Walmart, 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