Online Assignment Submission

Online AssignmentSubmission

Birmingham Business School

Student ID Number: 1498747

Programme Of Study: MSc Marketing

Module: Retail Marketing 07 21436

Assignment Title: A Retail Marketing Report about Walmart Chinaand ASDA

Date and Time of Submission: 20/07/2014

Word count:

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Content1.0 Introduction................................................42.0 The Background of Walmart...................................53.0 Retail Strategies...........................................5

3.1 Enter strategies.........................................5 3.2 Integration Strategy....................................6 3.3 Retailtainment Theory...................................6 3.4 Market Segmentation and Store Location..................7

3.5 Store Design.............................................93.6 Advertising and Promotions..............................10

4.0 SWOT Analysis of ASDA......................................114.1 Strengths...............................................114.2 Weaknesses..............................................124.3 Opportunities...........................................124.4 Threats.................................................13

5.0 Conclusion.................................................136.0 References.................................................157.0 Appendix...................................................19

Appendix 1: The Retail Landscape............................19Appendix 2: UK supermarket growth 2014......................19

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A Retail Marketing Report about Walmart in UK-

ASDA

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1.0 Introduction

ASDA is a retail supermarket, which is owned by Walmart.

Walmart entered the British market by acquiring ASDA in

1999. And then, to attract more customers awareness and

take more market share, Walmart UK was operated with the

name of ASDA (Walmart, 2015a). ASDA has been the second

largest supermarket in Britain.

This report will mainly talk about why ASDA is in a

particular wheel of retailing segment and discuss the

challenges ASDA facing in this aspect. Then, based on the

retailing strategies Bitner’s (1992) Servicescape and

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Ritzer’s (1999) Retailtainment theories, and some other

theories adopted by Walmart in UK with ASDA, explain how

ASDA designs its store to make maximized profit. The

recenely situations of ASDA with its main strengths and

weakness are analyzed as well. Last, according to the

shortages of ASDA, the suggestions and recommendations

are given to improve its performance in the future.

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2.0 The Background of Walmart

Walmart is an international American retail company,

whose first store was opened in Rogers, Arkansas, in

America in 1962. Nowadays, there are more than 11,000

retail stores in 27 countries around the world (Walmart,

2015c). To be international, in 1991, Walmart opened its

famous Sam’s club and jointed venture with a Mexican

retailer. And then, Walmart entered the British market to

take more market share. In UK, Walmart open its first

store in 1999, which is called ASDA now (Walmart, 2015a).

According to the survey of UK supermarket market (2015a),

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ASDA has recently become the second largest retail store

in UK.

3.0 Retail Strategies

3.1 Enter strategies

Suggested by Omar (1999), the improved domestic economic

growth can increase the domestic buying power, which was

good for Walmart to make more market share in foreign

countries. It was said by Burt (1993) that there were

three main factors, which can determine the direction of

the international expansion. The first factor is cultural

proximity, which means that the marketers are always

willing to enter markets considered as culturally similar

in their mind (Gilbert, 2002). It is the reason why

Walmart entered the UK earlier than other countries for

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the reason that a part culture of America was from UK and

the official language of both countries are English.

Also, Gilbert (2002) thought that the retailers would

like to enter the market, which was less developed than

their own market, so that they can get more competitive

advantage in the target market. In 1990s, the retailing

industry is not developed in UK, but Walmart had already

become a successful retailer in America and famous around

the world. In that time, Walmart can supply high quality

products and services for the consumers, which was much

attractive for the customers than its competitors.

To enter a new market, there was four basic methods for

the company, which was identified by many researchers as

a results of acquisition, joint venture, self-start entry

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and franchise (Omar, 1999).

For Walmart, it entered UK market by acquisition. The

main advantage of acquisition is the company can earn the

substantial market presence quickly (Gilbert, 2002).

Before the acquisition of ASDA in 1999, ASDA had been a

famous retail store in UK, which had already owned about

229 stores. After Walmart tookover ASDA, Walmart can

enjoy the good reputation and brand awareness of ASDA,

which help Walmart make the profit quickly.

3.2 Integration Strategy

Suggested by Cox and Brittain (1999), to combine

manufacture and retailing together, retailers can control

the internal cost and assure the continuity of supply

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sufficiently, which create the scale of economy too. It

is important to control the cost to suitable the budget,

which is good for Walmart’s logistics system. The

logistics department in Wlamart can make the suppliers,

logistics centers and retailing stores as a whole system

with the advanced Electronic Data Interchange (EDI)

technology, which helps Walmart to know about the selling

information of each product, and then, Walmart can decide

its suitable strategy to buy and sell the product.

3.3 Retailtainment Theory

Suggested by Ritzer’s (1999), retailtainment is making

the retail marketing as entertainment, not just selling

and buying. In this way, the retail store uses the

activity, ambience, emotion, and sound to attract the

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customers to be interested in the merchandise in a good

mood to purchase. Sometimes, retailtainment is also

called entertailing and inspirational retailing, which

has been defined as the modern trend of combining

shopping and entertainment opportunities together to

attract the customers.

ASDA is famous for its wide product-line. In the grocery

department of ASDA, it provides products in 10 parts,

which includes baby, beauty, fresh food, health,

household, pet, and so on. Moveover, it also sells the

clothing under its owned sub-brand George (ASDA, 2015a).

With the enough choice of products, the customers will

enjoy the shopping experience in ASDA. Also, ASDA has

supplied enough service for its customer. For example,

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ASDA is the first supermarket providing the Click &

Collect service for the customers and the customers can

choose the products they want online in UK, and then,

choose a store to collect the products for free (ASDA,

2015c). Compared with other competitors’ service, ASDA is

better than them for the reason that most retailers are

just supply the service of ‘reserve today before 12PM and

get it tomorrow’. However, ASDA’s customers can order the

things they want by 12AM and collect in the same day

after 4PM. At the same time, among the top 10

supermarkets in UK, ASDA and Sainsbury are the only

supermarkets, which provide Click & Collect service.

However, Sainsbury only got 21 stores providing the Click

& Collect service, which are amost located in London

(Sainsbury's, 2015).

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Also, Walmart is famous for its reasonable and lower

price than other retailers in its international markst.

The slogan of ASDA in UK is ‘Saving your money every day’

(ASDA, 2015c). Moreover, the price guarantee program

means that if the products price in ASDA is not 10%

cheaper than other retailer, ASDA will give the

difference of the price back to their consumers (ASDA,

2015b). Dong et al. (2007) had discussed that if the

manufacturer or the retailer is the price leader in the

market, which is a sensible research to know about why

ASDA can supply the lower price than other retailers, and

it will be talked in the following SWOT analysis. After

the research above, it is easy to know that ASDA is

making the retail marketing as entertainment.

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3.4 Market Segmentation and Store Location

Berman and Evans (2012) found that the customers of

supermarkets was usually a broad of people and the

company always adopted the mass marketing strategy.

However, the consumer demographics have a huge effect on

the consumer buying decision. For the different types of

retail stores, each type of the store should have its own

focuses to the customers.

Nowaday, there are six kinds of retail store owned by

ASDA in UK, such as ASDA Supercentres, ASDA Superstores,

ASDA Supermarket, ASDA Living, George Stores, Asda

Essentials. After the takeover by Walmart, the first

Supercentre opened in livingston, Scotland, in 2001.

Currently, the Milton Birmingham store is the largest

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ASDA Supercentre with the square of more than 11,000 m2.

ASDA superstores are the large supermarkets, which is

smaller than the ASDA Supercentre without the supply of

food. ASDA Supermarket was launched in 2009. Until 2011,

there are more than 26 small size supermarkets opened,

which were acquired from the Co-operative.

In October 2003, ASDA launched ASDA Living, which is the

first general merchandise store of ASDA, supplying the

beauty products, clothing, health, home electronics,

home-wares, toys and without food. In these retail

stores, they are operated with the coffee shop. In 2011,

ASDA wanted to establish a small number of George stores.

Based on the Channel Islands with the agreement with

Sandpiper CI, who will be responsible for the opening

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George franchises in 2012. In April 2006, ASDA launched a

new format store as ASDA Essentials, which was the old

Kwik-Save building for Pontefract and only stocking the

branded items with the aim to challenge the advantage of

Sainsbury and Tesco in the convenience store market. At

the same time, earning enough strength to compete with

the discount supermarkets such as Aldi, and Lidl. On 6

December 2006, it is reported that the further planned

store openings were under review following poor sales in

the existing outlets, while the range of branded products

being carried was also being expanded due to customer

demand.

The ASDA Supercentres are always supplying the bigger

packaged products with the wholesale prices, which is

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cheaper for the customers and suitable for the big

families or group customers to share them. Large amount

purchase power of the customers requires the Sam’s clubs

have the large warehouses place and the enough parking

area for the customers shopping, so the location of the

ASDA Supercentres are usually chose in the countryside

with the cheap rent and enough space. On the other hand,

for the ASDA Supermarket, they are willing to attract the

nearby families, whose houses are located in the

convenient areas. That is called the trading area, which

can be defined as ‘a geographic area containing the

customers of a particular firm or group of firms for the

specific goods or services’ by Bennett (1995). Berman and

Evans (2012) discussed that the importance of the

traffic, the parking areas, the convenience of

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transportations and some other factors are always have

the effects on the choice of the shopping stores’

location.

The lower price adopted by ASDA is used to attract the

consumers who are sensitive of the price. To attract more

customers, ASDA have three different categories of the

type of the stores, such as Supercenters, Superstores and

Living. Those three kinds retailing stores are in a large

scale and offer more than 10,000 kinds of products (ASDA,

2015e). Due to the cost of the large scale, ASDA is

always choosing the location of such bog stores outside

or countryside where the rent is much cheaper than the

city-centre.

3.5 Store Design

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Suggested by Bitner’s (1992), servicescape is used to

explanin the influence of the physical surroundings on

the Customers and Employees. For example, the quality of

the food may be the same in the differert restaurant, but

the customers will prefer to the higher quality the

environment restaurant. Also, Baker et al. (1994) said

that the consumers would like to use the social elements

and ambient in the store environment to cue the quality

inferences. Moreover, the store environment is posited to

show the store image to attract the customer, which

figured out the importance of a suitable store layout in

retailing. Park et al. (1989) had discussed that the

characteristics of grocery shopping. First, grocery

shoppers have multiple buying demands. Second, the buying

behaviors are always repeated. The study showed that a

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comfortable store environment arrangement could improve

the shopping experience for the customers.

The research on the objectives of the good store design

by Levy and Weitz (2008), discussed the importance of the

store design, the store image and the store strategy. For

the most drugstore and grocery stores, the grid layout is

best choice for the retail store, which has been adopted

by ASDA with less space wasted than other layout, for the

reason that more goods can be displayed in the same

space, so the space is enhanced to save space. In ASDA

Supermarket (ASDA, 2015a), the store is designed with the

high ceilings and metal grids. ASDA Living store is

designed with concrete fllor to instead the tile, which

saves the operation cost to reduce the buying price of

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the products for the customers.

Meanwhile, Levy and Weitz (2008) has also suggested the

importance of the type of areas to attract the awareness

of the customers. Every season, ASDA will organize

different activities to attract the customers. For

example, ASDA hold the ‘Let’s Garden’ in spring, which

provides many kinds of products in discount in gardening,

helping ASDA to increase the seasonal products sales and

add some new and fresh elements to the stores with the

background music to make customers feel comfortable.

Milliman (1982) had argued that the comfortable

background music has an effect on the customers shopping

behavior in stores and the soothing background music

played in store can keep the customers in stores longer

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and increase the possibility of the customers to make

more purchase.

3.6 Advertising and Promotions

Berman and Evans (2012) discussed the difference of the

promotion from the manufacturers and retailers. Retailers

are more care about the target market, which they can

know more about the local customers’ needs and

preferences. Then, retailers are always willing to figure

out the prices in advertisment, while the manufacturers

are usually introducing the key features of products. It

is an important positive relationship between the regular

price and promotion price purchase. If the buyers are

attracted by the products’ promotion price, most of them

are likely to buy the product again without the promotion

when they think the products are worth to buy. It is a

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good way for retailers to use the promotion to make more

profits and increase sales.

The main promotion way of ASDA is multisaves, which means

that the customers buy more than one products to enjoy

the discounted price, when they are willing to buy more

products than they expected, helping ASDA make more

profits and increase the whole sales for the store.

4.0 SWOT Analysis of ASDA

4.1 Strengths

ASDA provides some other convenient services for the

customers, such as Apps, insurance, credit card, etc. The

wide services supplied by ASDA make it enable the

customers’ one stop shopping to save the time and money

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for them. ASDA has own a set of products, which are

produced with ASDA’s label and name. It is the big

strengths for ASDA to compare the price with the same

kind products produced by other brands. For example, for

the same function of the washing powder (1kg), the price

of other brand washing powder is £3.38 and the price of

ASDA is £ 1.63. So that the price of other brand is £1.75

higher than ASDA’s (ASDA, 2015d).

There are several important aspects for ASDA to keep the

comparatively lower price than other competitors. Based

on the distribution system and the Retail Link system,

ASDA has the strong bargaining power than others. ASDA

has owned 17.1% market share in UK, which is the second

largest supermarket in 2015 (Statista, 2015). The large

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scale of economy for ASDA helps it earn the big volume of

goods to purchase, the strong bargaining power and the

whole-sale discount easily.

4.2 Weaknesses

It is difficult for Walmart to understand the local

customers as well as the customers in its own country

America. Although there are more than 95% local products

sold in ASDA (ASDA, 2015a), Walmart still need to learn

about how to attract more customers in local environment

and negotiate with local suppliers for the lower price

and high quality products.

ASDA uses the one-price policy for many essential grocery

products, which means that the retailers charge the same

price of the products for all the consumers under the

25

same conditions without special discount or reduction

(Berman and Evans, 2012). Although it can attract some

consumers and build its own brand awareness, some

researchers suggested that it does not always works,

especially for the customer who shopping more in ASDA.

Suggested by Dickson and Sawyer (1990), the customers

were willing to spend less time to buy the products they

want, which shows that there are a few consumers are

sensitive about the price. It is easy to find that the

one-price policy is not as efficient as ASDA want.

4.3 Opportunities

Nowadays, ASDA has developed many kinds of the

untraditional programs and the supermarket services for

the customers, such as credit cards, insurance, mobiles,

top-up, tyres, etc. To make more profits and take more

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market share, ASDA supplies as more convenient services

as the customers’ need, which can help attract more

customers’ awareness and loyalty for the brand of ASDA.

Compare to other competitors, ASDA can also get the help

and experience from the parent firms-Walmart. Supplying

more services as the customer want can help ASDA take

more market share in the industry and make more profits.

At the same time, attracting the consumers to stay longer

to make more shopping in the store and enjoy the products

and service.

4.4 Threats

Now, ASDA has faced the challenges from its competitors

of Mossisons, Sainsbury and Tesco. At the same time, the

threats from Aldi and the high-end supermarket like

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Waitrose, which is no-frills supermarkets, are becoming

bigger as well. Aldi is good at attract the consumers who

are price sensitive to buy products with lower price for

the low operation cost (Pettinger, 2014). Due to the

unsatisfied performance of Tesco in the last year, which

makes Tesco is trying to make the changes to maintain its

leading position in market industry.

Although ASDA keeps the good growth rate about 1% in the

comparisons with Morrison’s about -1.8%, Sainsbury’s -

3.1%, and Tesco about -3.6%, ASDA still has the shortages

to overcome. All those three big supermarkets have its

owned convenience stores in the busy city centers making

the consumers to buy essentials products conveniently.

Otherwise, ASDA is lack of such type of stores to attract

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customerst.

Moreover, ASDA does not hold the loyalty card for its

consumers to make more advantage. Suggested by Noordhoff

et al.(2004), the loyalty card has an indeed effect on

consumers’ loyalty and their attitudes toward the store.

Meyer and Waarden (2008) used the data on supermarket

buying behavior to indicate that the influence of loyalty

membership on the consumers buying behavior is important.

So, operating a loyalty program may for ASDA’s customer

can help it improve the brand awareness and attract more

consumers.

5.0 Conclusion

Overall, there are many differences between Walmart and

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ASDA, which are owned by Walmart in different countrie.

That is the reason why the retail strategies of Walmart

and ASDA are totally different, which need to suitable

for the local culture to earn more customer awareness.

Because of the different economic development stage and

the consumer preference, ASDA should have its own retail

strategies to earn the market share in UK, which can be

seen above and showing the result that the performance of

ASDA successfully in the country with the appealing to

the local culture. It is obvious that ASDA can perform

better than today by expanding their own strengths,

reducing current shortages and catching the opportunities

to be stronger in the future.

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6.0 References

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7.0 Appendix

Appendix 1: The Retail Landscape

Appendix 2: UK supermarket growth 2014

39

(Pett

inger, 2014)

40