Kantar: Asda now ‘Britain’s biggest pound shop’

Asda has become ‘Britain’s biggest pound shop’ with more than 14% of its sales generated by products with a £1 price tag, according to Kantar Worldpanel.

Speaking at the Food and Drink Federation’s Biscuit, Cake, Chocolate and Confectionery conference on Friday, Kantar Worldpanel communications director Ed Garner said that a growing percentage of grocery products were now sold with a £1 price tag, especially in the biscuit, cake and confectionery sector. “18% of the biscuit market is selling at £1 and 25% of the take-home confectionery market is now sold at ‘round pound’ prices.”
Growing enthusiasm for these more simple price tags was perhaps a reflection of the success of stores such as Poundland, he said, but it also gave the industry more flexibility to tailor products to meet a particular price point while maintaining margins - something that the pound shops were particularly good at.
Shoppers spurn hard discount stores​
But "flocking to the hard discounters" had proved a “transient phenomenon”, he said, with shoppers now spurning these stores as the economy emerged from recession. “Aldi was growing at 25% year-on-year at one point, but it hasn’t got the repeat custom, new customers are not coming in and people are not doing heavy shops there anymore. For a lot of cusomers it’s a case of the cat will put up with the catfood and the fruit and veg is quite nice, but I’ll do the rest of my shop somewhere else.”
Tesco’s discount range had not set the world on fire, he claimed. “It’s about 1% of Tesco’s sales but it’s not really going anywhere. However, to scrub it now would mean a huge loss of face.” Meanwhile, Tesco’s claim to be ‘Britain’s biggest discounter’ was “not actually as motivating to the average housewife” as its marketers originally thought, he claimed. On an operational front, adding complexity and increasing the sku [stock keeping units] count was also a questionable strategy at a time when the competition was “doing the exact opposite”, he added.
While supermarket value ranges had surged ahead as the economy nose-dived, growth had since tailed off, while premium own-label was coming back with a vengeance, he added.
Not out of the woods yet​
But we are not out of the woods just yet, cautioned CBI head of economic analysis Lai Wah Co, who was also speaking at the conference. “We are actually quite gloomy about the outlook as there are many uncertainties out there.”
While the food sector had proved more resilient than many other sectors, manufacturers still faced ongoing credit constraints, she added. “Companies will still find it hard to borrow money, profitability has been badly hit and the outlook is still uncertain, so it’s hard to commit new funds.”
She added: “We’re not going to go back to pre-recession levels of spending and production, even by the end of 2011. We also have a huge structural deficit and it’s not going to shrink by itself. And tax receipts from property and financial services are not going to come back.”