Asda, the U.K. supermarket chain owned by Wal-Mart Stores Inc. (WMT), may broaden a guarantee to sell grocery items 10 percent cheaper than rivals to non-food products such as electronics and toys.
“We’ll look to keep extending the Asda price guarantee,” Chief Executive Officer Andy Clarke said in an interview at the British Retail Consortium symposium in London today. “It seems a natural extension to broaden the ranges, including non-food.”
Asda, the second-largest U.K. supermarket chain, guarantees that a fixed basket of grocery products is 10 percent cheaper than rivals or it will refund the difference. The retailer has 3 million customers that check prices because of the guarantee, the executive said, adding that price transparency is becoming more important with the prevalence of Internet retailers.
“To see what price you’re paying is going to become even more important for general merchandise,” Clarke said. Apparel is “slightly more difficult” because of fashion trends.
Clarke said electronics, home wares and seasonal items like toys “are market opportunities where Mum this Christmas will be thinking really hard when they’re shopping for Santa.”
Sales growth at Leeds, England-based Asda slowed in the first quarter of the year as customers faced rising inflation, higher taxes and record gasoline prices. Revenue at stores open at least a year rose 0.8 percent, excluding value-added tax and adjusting for a later Easter holiday, Asda said last month. That was less than the previous quarter’s 1.6 percent growth.
May was a tougher month for Asda than April, Clarke said today, echoing earlier comments by Philip Clarke, the CEO of rival Tesco Plc. The Asda executive said he expects shoppers to continue watching their spending this year as fuel prices rise.
Own-label products such as the Chosen By You range, which Asda spent 100 million pounds ($164 million) relaunching, have been performing ahead of expectations, Clarke said.
Media speculation that Asda has appointed Lazard to advise on a possible bid for Iceland Foods Ltd., the U.K.-based frozen- food chain, is “unfounded,” Clarke said. Asda bought some former Somerfield Plc outlets after that company’s 2008 takeover by Co-operative Group Ltd. and should some Iceland stores become available “we would look at them,” he said.
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