We round up the latest news from Asda including its George Rewards trial and new George range made from recycled products.

George Rewards trial

Asda is trialling a new loyalty scheme called George Rewards where shoppers earn points for purchasing George clothing and home lines online. They earn one point for every £1 spent on the George range and double points on orders over £50 or more. To encourage shoppers to join, Asda will be giving an initial 100 points to shoppers when they sign up, 20 points for writing a review and 50 points for referring a friend.

The points can be exchanged for tailored discounts such as; spend £30 and save 15% or 20% off adults boots and wellies.

Asda has not traditionally run loyalty schemes, preferring to keep overall prices low rather than invest in the administrative costs of running a scheme. However clearly it senses an opportunity from building a closer relationship with its clothing customers, both by inspiring them to purchase and encouraging them to become advocates for the brand by sharing reviews.

New sustainability pledge

Asda will be launching a new range of George products in its 2019 spring/summer range that are made from recycled bottles and clothing. This is part of the retailer's pledge to improve the ethical and environmental impact of its products.

It has also committed to only using polyester that is sourced from recycled materials by 2025. This is alongside only sourcing sustainable viscose and cotton by 2025 and 100% sustainable timber by 2020. Senior vice president for commercial, Nick Jones said in a blog post launching the new initiatives;

"As the second largest clothing retailer in the country, we have a responsibility to do the right thing by our customers, not only on price and quality of our goods, but also on the impact we have on the world around us."

Retailers are continuing to announce new initiatives around what we have identified in our Global retail trends 2019 report as 'doing good is good business'. Some recent examples of this are Aldi and Tesco launching plastic-free trials. We expect retailers to continue pushing their sustainability credentials further in the future. With a focus on helping customers and communities live better and more sustainable lifestyles.

Sign-up here to receive our free newsletter that will keep you up-to-date about the latest news and developments from Asda.

Opening Retail Week Live, Judith McKenna, CEO Walmart International refused to be drawn on its future ownership of Asda. The merger with Sainsbury’s is “still in the process, we’re working with the CMA (Competition and Markets Authority), and we’ll see what the road ahead is when they publish their next papers” she stated. McKenna shared her belief that Asda has put together a “fair and reasonable proposal” to enable the merger to be delivered to benefit British consumers. Reiterating Walmart’s international strategy of strong local businesses powered by Walmart, she reconfirmed her objective to position Asda for long-term success.

Addressing Retail Week Live with her opinions on the “Future of Work”, McKenna discussed the integration of technology into the Walmart business, and her view that there are three priorities for retailers:

• Public engagement: having a real conversation with the public around digital evolution, listening to their fears and telling positive stories
• Reimagining education and training: the need for businesses to commit to life-long learning and supporting their workforces to transition into new roles created alongside enabling technology. Walmart see this as a partnership, with governments and education bodies
• Make work more inclusive: being proactive to actively create new, equal opportunities

Waitrose: ranging and online update

Waitrose & Partners' MD Rob Collins provided an update on its ongoing range review process, on plans for Waitrose.com once the Ocado supply agreement ends and on Waitrose’s long-term outlook.

Collins stated 24 categories have now been reviewed, with plans to do 70 more before the end of 2019. Waitrose aims to remove complexity and duplication from its ranges, but in keeping with its strategy to “be close to its most loyal customers” it will keep products listed if data shows they are purchased disproportionately by frequent and main Waitrose shoppers.

On its online plans, Collins reiterated the Ocado relationship had “been a commercial one”, and that it has been very consciously strengthening Waitrose.com by investing 20% of its discretionary capital on it over the last five years. Waitrose.com grew at 14% last year (now accounting for 5% of Waitrose sales) and it plans to double this over the next five years. Customers who shop at Waitrose.com spend four times more in total across the full Waitrose & Partners portfolio than those who do not.

On its future plans, Collins stated his belief that the “supermarket industry is going through a period of change”, and he “fundamentally disagrees that the answer is scale”. Waitrose & Partners is not concerned with “only having 5% of the market”. Waitrose, Collins said, is “comfortable in its own skin” and that its current operating margin of 3.2% is a “very sustainable level for us”. He sees an increasing polarisation between “the function of shopping and experience of shopping”, and Waitrose will focus on delivering its shoppers value over price.

Boots: four take outs

Seb James, SVP, President and MD of Boots, has been in role since September 2018, having joined from Dixons Carphone. Four take outs from his presentation at Retail Week Live were;

1. Boots needs to lever the asset of its heritage, not let it be a “straitjacket”: it is 170 years old this year, and the opportunity is to build on the trust the brand has (second most trusted UK healthcare brand after the NHS) rather than living under a “heritage asset shadow” that prevents development.
2. The Boots Brand Guidelines need to be relaxed: by constraining how brand owners can execute in Boots stores, Seb feels Boots has “become less relevant to its customers and suppliers”.
3. There are three clear elements to the Boots business: these are helping customers to get better, to live well and to look great. In 2019 Boots will be adopting a more missions-based approach to its retail proposition to reflect these different elements, as customer demographics and behaviour is very different in each.
4. There will be new format Boots retail stores launched in H2 2019, based around missions and with a more differentiated Beauty proposition. Seb stated that Boots has “got behind the curve” on beauty retailing. Consumers are less brand loyal and are increasingly influenced by social media, so Boots needs to create a new retail experience, with the aim to be the “global leader in personalised beauty”.

It has emerged that Sainsbury’s and Asda have offered to sell 125-150 supermarkets and 38 petrol stations in order to secure approval from the Competition and Markets Authority (CMA) for their proposed merger.

New measures to resolve competition issues

The offer is designed to counter competition concerns resulting from the merger. In its provisional report published last month, the CMA found that the merger could reduce competition at both a national and local level. This belief was based on analysis of 629 localities where it found that the tie-up could cause ‘significant lessening of competition’. To neutralise this impact, the watchdog proposed that the two retailers would need to identify and dispose of  c.300 stores.

The offer of store disposals follows just days after revelations that the two retailers announced they would invest £1bn into price cuts and introduce cap on fuel profits if they were allowed to merge.

Criticism of inquiry methodology

Sainsbury's and Asda have also been highly critical of the methodology used by the CMA to measure the strength of local competition and how people shop. In their response to the notice of possible remedies Sainsbury's and Asda said:

"The CMA has applied a threshold for identifying local areas of concern that does not fit the facts and is far below the most conservative standards applied in previous cases. This means that the CMA identifies an area of concern where an Asda and a Sainsbury’s store are within seven minutes’ drive time of each other, irrespective of whether there are one or six competitors in the same area. Essentially, a competition test that ignores competition."

The CMA will publish its final report into the merger by April 30th.

For more detail on the merger visit: Sainsbury's and Asda: a merger proposal

IGD Sainsbury's Trade Briefing 2019

27 June, London

Hear from Group CEO, Mike Coupe and the Sainsbury's and Sainsbury's Argos leadership teams, who will provide a business and commercial update on ‘Destination Sainsbury’s’.

Find out more »