SUPERMARKET giant Asda is to use delivery models pioneered to serve some Scottish islands to extend its reach into rural areas.
The market number two behind Tesco yesterday posted a 0.7% rise in like-for-like sales for the12 weeks to July 5 as it competed on price to bring cash-strapped customers through its doors while eschewing techniques such as till-point vouchers and city centre convenience outlets being pursued by its rivals.
The chain recently arranged deliveries to islands including Skye and Arran, in response to what it said was local demand.
However, it will also continue to expand its supermarket estate, having recently opened outlets in Fraserburgh, Dundee and Larkhall in South Lanarkshire to take its Scottish presence to 57 stores. It plans to open another in Braehead, Renfrewshire, in June 2014.
Chief executive Andy Clarke, who visited Inverness earlier this month said: "It was brought to our attention that the costs that were being incurred by people living in outlying areas were ridiculous. We felt compelled to do something."
An Asda delivery van now heads to Skye three times a week from its Inverness store after the grocer hired three drivers to service the route. For Arran, a local haulier picks up customers' orders from Asda's store in Govan, Glasgow, once a week. Seafood producer Barra Atlantic collects from the store for that island's residents while ABGM Delivery does the job for Millport, Isle of Cumbrae.
Mr Clarke said: "There will be more rural areas where we will take the same approach."
Asda, owned by US group Walmart, is keen to reach the 47% of the UK population that does not have access to one of its stores.
It is accelerating the rollout of grocery shopping collection to almost 250 sites, including petrol stations, park-and-ride stations and locker sites, by the end of 2013.
Karen Hubbard, executive director for property and multi-channel at Asda said: "We believe that collection will be as big as delivery in the next couple of years."
Other supermarkets have instead focused on home delivery and building convenience store chains to benefit from the trend for budget-conscious customers to do top-up shops to avoid waste.
Mr Clarke insisted Asda, which employs 20,000 people in Scotland, would not open convenience stores.
"We are a single-price retailer. It is still quite astonishing you can shop in a convenience store at one of a number of chains and pay 40% more for your bread and milk and sugar," he said.
While Tesco chief executive Philip Clarke called an end to the so-called space race earlier this year as he wrote down its landbank by £803 million, Ms Hubbard said Asda has aggressive plans to expand, although growth will fall to 369,000 square feet this year.
Asda is seeking to develop many stores into community hubs to attract customers, with Ms Hubbard noting that its store in Forfar is a venue for written driving tests after the Driver and Vehicle Licensing Agency closed its office in the Angus town.
Asda's figures represented a slowing of growth following first quarter sales growth of 1.3%, excluding fuel and value added tax.
It has also seen an erosion of its market share which stands at around 17%, a development Asda attributed to its decision to keep prices low in an effort to avoid the falls in sales volumes afflicting the sector. "It is unhealthy to have a business that has revenue increases and a volume decline. That is not sustainable from our point of view," Mr Clarke said.
The latest period misses most of July, when retailers received a fillip from the warm weather.
Figures show slight growth, but Mr Clarke said: "Let's face it, we are bumping around the bottom."
Walmart CEO Doug McMillon said: "The British consumer remains under pressure."
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