Asda is launching a new value range focusing on the cost-of-living crisis as part of its push to overtake Sainsbury’s as the UK’s second largest supermarket, as it reveals profits have soared by 42% over the past year.
The new budget-friendly ‘Just Essentials by Asda’ range has been launched “to help millions of families fight rising living costs”, strengthening the supermarket’s current position as the lowest-priced Big Four supermarket.
Owners the Issa brothers – who bought Asda last year for £6.8bn – hope that the new cut-price range will help Asda overtake Sainsbury’s to reclaim its position as the UK’s second-biggest supermarket, behind leading grocer Tesco.
“We understand that customers are increasingly worried about the cost of living and want help to keep their grocery bills in check, while still being able to buy healthy and nutritious food for their families,” said co-owner Mohsin Issa.
The new Just Essentials range has been “specifically designed with this in mind”, combining lower prices with a “much larger and more diverse range of great value products”.
Comprising of 300 products, the new range will include non-food household essentials as well as fresh, frozen and ambient food and drink. Available from May, it will be stocked across all of Asda’s 581 food stores and online and will eventually replace the current Smart Price value range.
This shake-up of Asda’s product range – and the addition of other consumer-facing initiatives such as a loyalty programme and a one-hour delivery service – came as the supermarket revealed a 42% rise in profits to £693.1 million. It said this was “predominantly due to a reduction in Covid-related costs”, as Asda invested heavily in keeping colleagues and customers safe.
At the same time, sales remained largely flat with an increase of just 0.6% on a like-for-like basis (excluding fuel), as customers returned to pre-pandemic habits amid the cost of living crisis.
These small gains were attributed to a “strong performance” in the home and outdoor sectors as well a return to growth for its George fashion brand after the “pandemic-related disruption” seen in 2020.
Grocery sales decreased by 0.5% on a like-for-like basis, compared to 2020, when the UK spent most of the year under Covid-related restrictions. However, like-for-like grocery sales remained strong on a two-year basis, with growth of 4.6%.
Online sales dipped by 5% in 2021 against the previous year, as consumer confidence returned, resulting in a reduction in home deliveries. Despite this, demand remains significantly above pre-pandemic levels with sales 75% up on 2019.
In December, Asda hit its target to create one million delivery slots in the week preceding Christmas and regained its position as the UK’s second-largest online grocer by market share.
“When we bought Asda we were clear that we wanted to grow this great business and our ambition is for Asda to regain its position as the UK’s second largest grocery retailer,” said Mohsin Issa.
“We are pleased with the progress made in the six months since we officially took over the business and are confident we can achieve this long-term ambition by providing customers with exceptional value wherever and however they choose to shop with us.”