Blackfriar: Now quality counts as Asda aims to lure back shoppers

Hats off to Asda for admitting that its previous own brand label had become "invisible" and "unloved".

Asda needed to do something dramatic to change its fortunes.

Last month the group, owned by US retail giant Wal-Mart, announced a second successive fall in quarterly like-for-like sales.

They fell by 0.4 per cent in the three months to June 30 following a 0.3 per cent slide in the first three months of the year – the first fall in four years.

Asda has been losing market share amid stiff competition from peers. The most recent figures from Kantar Worldpanel revealed that Asda's share fell to 17.2 per cent from 17.4 per cent a year earlier – the ninth fall in a row.

New chief executive Andy Clarke says the group's biggest mistake was too great a focus on the ubiquitous BOGOFs or Buy One Get One Free deals.

Clarke argues that shoppers were confused by the myriad of promotions but now, under his new regime, the focus is on a clear transparent every day low pricing structure.

Clarke has reduced bulk buy promotions by a third.

"We won't yo-yo on price, " he says. "I believe customers want a more transparent approach."

Now that's out of the way, it's the right time for the group to turn its attention to quality.

At a launch in London this week Asda was rightly proud of its new 'Chosen by you' range – it looked good and tasted great and if, as it promises, customers won't pay more than before, the group should see a sizeable uplift in sales.

The range will have 3,500 individual products including 500 entirely new ones and 1,000 reformulated products.

The 'Chosen by you' products are expected to make annual sales of 8bn-9bn.

The relaunch follows an intense nine months of testing and reformulating products to improve their quality.

Some 40,000 consumers took part in 200,000 blind taste tests across the UK.

For too long Asda has focused on price and taken its eye off the ball when it comes to quality.

Customers on internet noticeboards have complained about declining quality – meat that shrivels when cooked and sad-looking fruit and veg.

"Asda has always focused on price and we will continue to do that, but consumers are also demanding quality and service," says Clarke.

The relaunch should also go some way to lure back customers who have become disillusioned with the falling standards.

"We're sending a clear message that Asda will now drive as hard on quality as it does on price," says Clarke.

A sizeable proportion of Asda shoppers, particularly the better heeled, are happy to use Asda for bulk shopping – shampoo, washing machine tablets, pet food, loo roll and tinned, frozen, canned goods.

But they have turned elsewhere – typically Marks & Spencer, Waitrose or Sainsbury's – for perishable goods such as speciality breads, ready meals, cakes and delicatessen products.

The new 'Chosen by you' products, which include a range of cakes from Whoopie pies to Lemon Daisy cupcakes, freshly baked speciality and artisan breads, low fat soups such as Red Pepper and Wensleydale and bistro hot pies such as the Ultimate Steak Pie and Lamb Hot Pot, should go a long way to bringing these shoppers back.

One positive comment to come from the internet noticeboards is that customers would go back to Asda like a shot if the quality of the food improved.

There is still a latent fondness for the group and its rich heritage. Andy Clarke must tap into that.