ASDA hopes to turn the weekly shop into a trip out by introducing fast-food outlets and other vendors in more of its stores, its chief executive said yesterday as the retailer gained ground in the grocery price wars.
Britain's second-biggest supermarket chain has been impressed by a handful of trial branches of Barclays and Subway in its shops, and Andy Clarke plans to expand the concept.
"We are in discussions with a number of partners about diversifying. You will see partnerships in food and non-food so there is a destination reason to shop [with Asda]," he told reporters yesterday.
The strategy follows in the footsteps of Asda's American parent company Walmart, the world's biggest retailer,which has more than 1000 branches of Subway and McDonald's in its US stores.
British rival Tesco has also been experimenting with in-store coffee shops and Giraffe restaurants in a bid to attract more customers to its bigger branches.
Asda already has about 200 in-store pharmacies and about 80 opticians under its own brand. Barclays has opened eight branches in Asda shops as part of a pilot that began in February, and Subway opened its first Asda franchise last November.
The supermarket also intends to revamp more than 160 of its shops next year. Unlike other large grocers Asda has not yet launched smaller convenience stores, but Mr Clarke believes the firm's breadth of products and fierce price-cutting pledge will attract value-conscious shoppers to its supermarkets.
These tactics appeared to have paid off in recent weeks. Asda enjoyed a 0.5 per cent rise in like-for-like sales in the 10 weeks to the end of June, accelerating from a 0.1 per cent increase in the first quarter. Asda also took an extra 0.14 percentage point share of shoppers' spending from its rivals.
The difference in price between Asda products and those sold by fast-growing discount grocers Aldi and Lidl is the narrowest it has ever been, said chief finance officer Alex Russo yesterday, adding: "We have a long-term plan to continue to narrow it."
The price battle between grocers has been so intense that on Tuesday it was blamed for a 0.3 per cent fall in like-for-like UK retail sales in July.
The grocery market grew just 0.9 per cent in the 12 weeks to July 20, according to Kantar Worldpanel. This is the slowest pace of growth in a decade.
Tesco, Sainsbury's and Morrisons have all slashed the prices of basic goods including milk in a bid get customers through their doors. However, all three have reported a drop in like-for-like sales at various times this year as they were squeezed by both the discount stores and higher-end brands including Waitrose .
Despite Asda's early success in the price war, Mr Clarke said it was too early to declare victory. "I've been in this business for too long to measure success by quarters and we remain on a long-term journey," he said.
Asda has pledged to spend £1 billion over five years on its "everyday low prices" campaign to keep its products competitive.
The company will add three new shops in this quarter, including the £22m supermarket in Barrhead that opened on Monday.
Shoppers are also turning to Asda's click and collect service in growing numbers, with one in 10 online customers, or 20,000 a week, now picking up shopping bought over the internet.
The shift to online retail has also been a boon for Asda's clothing range George, which recent overtook Marks & Spencer to become Britain's second-biggest clothing retailer by volume, behind Primark.
Mr Clarke said George's school uniform range, which offers £2 jumpers and £3 trousers, is appealing to shoppers online and in store.
However, the outlook is gloomier for Walmart, which yesterday cut its forecast for 2014 due to higher spending on its online infrastructure, sluggish sales in America and staff healthcare costs in the US. Walmart has owned Asda since 1999.