Asda has revealed an audacious plan to steal a march on Tesco and take on the hard discounters with a new store format that offers 95% own label and 5% branded goods, The Grocer can reveal.
The format - which has not yet been branded but internally dubbed Discount Plus - will come as a surprise to many commentators who had linked Tesco with a move into discounting rather than Asda.
News of the so-called Project Disco initiative will also end speculation that Asda was planning to make a move into the convenience sector.
The Discount Plus format will be trialled at an 8,000 sq ft former Co-op store on St James Road in Northampton.
Refurbishment is expected to begin as soon as the store’s acquisition is completed with a view to opening towards the end of the first quarter next year.
Finance director Judith McKenna told The Grocer that Northampton had been selected because Asda already had a high street George outlet and a 30,000 sq ft superstore in the town so it would be good place to test the chain’s multi-format retail strategy.
She said the new store would showcase about 2,500 SKUs covering the full spectrum of Asda’s own-label range from Smartprice to Extra Special, in an environment that she said was “convenient” rather than “convenience”.
McKenna added: “It’s a completely new proposition, building on the quality credentials of Asda’s brand. Something like this is really on people’s doorsteps. We opted for this because we think it’s going to provide access to a market we’ve not currently got.”
Non food would only play a “very small part” in the offer, she said, and would be focused mainly on consumable items and so-called Wow promotions.
Prices would be the same as in Asda’s existing stores. Asda would undercut the hard discounters if necessary in order to “be the cheapest in town”.
But McKenna did not believe Asda would have to cut prices. “We still hold that we are the cheapest on like-for-like products.”
A key difference from the hard discounters would be the superior service in the new store, said McKenna. “You will get free carrier bags and be able to pay with a credit card. You will also get warm, friendly service, which will be part of the personality of the store.”
She would not be drawn on how many stores Asda hopes to develop if the trial is successful, but envisaged a couple more potentially next year “to test things in different markets”. She would not say whether it was eyeing any of the stores being sold by The Co-operative Group.
Although the new store is in a non high street location, this does not mean that future stores would also be in secondary sites. “We need to see what happens with this one first. We don’t want to speculate on what the future might look like.”
>>pp26-31 Asda Special Report
Liz Hamson