Asda president and CEO Andy Bond has predicted that the recession will “fundamentally change” the buying patterns of UK consumers.
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Speaking yesterday (11 December) at a seminar to discuss the impact of the downturn on consumer spending, Bond (pictured) said consumers are no longer willing to pay a premium for products.
“The era of conspicuous consumption is over. Saving money by cutting out waste of all kinds will be the priority. I don’t see this as being a short-term response to the recession but a fundamental shift that will see the emergence of a new breed of customer,” he predicted.
“The new emerging consumer will demand more value for money than ever before and genuine price transparency. Retailers will have to respond by adapting their business models if they are to survive.”
Retailers who fail to adapt to the new market realities will fall by the wayside, he warned.
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By GlobalData“Retailers with authentic low-cost operating models, who embrace sustainability as a means of reducing costs and who are transparent about how they pass savings on to their customers will be the winners. Those who continue with high/low pricing will become increasingly distrusted.”
With its value focus, Asda has gained market share in the UK since the downturn started to bite. According to TNS Worldpanel grocery market share figures, published earlier this week, Asda was the second-fastest growing grocery major behind Morrisons. With growth of 7.8% in the quarter – ahead of the market’s average growth of 6.2% – Asda saw market share gains.
Likewise, in the US, Asda’s parent Wal-Mart has reported increased market share as economic conditions worsen and consumers trade down. The word’s largest retailer reported like-for-like sales growth of 3.4% in November, despite a fall of 2.1% for total retail sales during the month.
In a jibe at the Office of Fair Trading’s scheme to establish a code of practice and retail ombudsman to oversee the UK grocery retail sector, proposed following the watchdog’s inquiry into competition in the market, Bond warned that “regulation is the enemy of low-cost retailing”.
“Government needs to stimulate competition by carrying through the proposed reforms to the planning system and at the same time resist the temptation to bind retailers in red tape, codes of practice and ombudsmen.”
