Report on the ASDA supermarket chain
Asda is a leading nationwide supermarket market chain in the United Kingdom. The chain offers food, clothing and general merchandise products. Asda became a subsidiary of the giant American retailer, Wal-mart in 1999. Wal-mart is the largest retailer in the world.
Asda was co-founded in 1965 by two farming brothers from Yorkshire and Noel Stockdale. The chain initially started with just a few stores offering dairy products and general groceries.
Asda’s roots can be fully traced back to the 1920’s. The Asquith family had a family business as butchers. The two sons of the Asquith family became co-founders of Asda. At the same time, a group of Dairy Farmers joined forces. Through a process of diversification and acquisition Associated Dairies and Farm Stores was formed in 1949.
Noel Stockdale, later Sir Noel, me and struck up a good rapport with the Asquith brothers and became the final co-founder of Asda .
The name Asda is a contraction of Associated Dairies.
The company went through a troubled period in the early 1990s. ASDA, which then owned 229 stores, was purchased by Wal-Mart of the United States, on July 26, 1999.
As of May 2005, Asda had 265 stores and 19 distribution centres, employing 128,000 people.
Asda have three major competitors within an oligopolistic market. There are of course other competitors. The other companies do not dominant the market in the same way as the likes of Asda and Tesco. Their market share is much less significant that that of Tesco, Morrison’s and Sainsbury’s. Tesco is the nationwide leader of the UK supermarket niche. Tesco has an estimated 30.4% compared to Asda’s 16.6%. Sainsbury’s are not far behind with 16.2%. Morrison’s have 11.2% of the market. The remaining 25.6% of the market is taken by other supermarkets such as Aldi.
Sainsbury’s used to be the market leader. Sainsbury's had a firm grip on the top spot until 1995 when it was overtaken by Tesco . It is believed Asda has an inbuilt advantage to claim a large share in the market due to its stores being larger than average. This allows Asda to fill them with non-food products and diversify the range they offer.
Supermarkets such as Aldi struggle to dominate the market as they only sell heterogeneous products. Products offered by the more dominant stores are both homogeneous and heterogeneous. The four leading firms sell the brand names such as Cadbury’s or Heinz. These products would be their homogeneous products. Their own brands such as Asda Smart Price would be the heterogeneous products.
The prefix ‘homo’ means ‘same’. Hence, branded products are classed as homogeneous products because they are available in any of these dominant supermarkets. ‘Hetero’ is the opposite and means ‘different’. Therefore, heterogeneous products are only available in the specific stores that manufacture them or that have them manufactured for them.
There is however very little difference between the products offered, as the heterogeneous products may be manufactured at the same factories. This means that Asda must compete with their rivals using low prices for goods and high quality of customer service.
Asda, like Morrison’s, does not operate convenience stores unlike Tesco and Sainsbury’s. Tesco have their smaller, convenience stores, called Tesco Express in small villages.
Asda is famously known for its “Asda Price” and “Roll Back” marketing campaigns. Due to price being one of few options to compete with the likes of Tesco, Asda have to set prices as low as possible. This is what the “Asda Price” and “Roll Back” campaigns aim to do. Asda’s policy is to introduce ‘permanently low prices’ through “Roll Back”. This means that Asda can have fewer promotions but more permanently low priced products.
Asda’s prices for goods were on average 5 to 10 percent lower than the market...
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