UK supermarket profits from customer-driven innovation

Posted by Isobel Drake on 19th May 2009

Asda, the UK’s second largest supermarket chain, reported its twelfth successive quarter of market out-performance with underlying sales rising by 8.4% last week as they enhanced their innovation on the back of new programs to engage consumers.

The company attributed the results to a heightened focus on value – assisted by thousands of ‘rollbacks’ and improved private label quality as well as new innovations derived from customer insights.

Asda announced that more than £60m (A$120m) had been spent on improving the quality of their private label goods, which had performed well in the turbulent economic environment. They also hoped to better engage their employees with the message of value they were trying to convey to shoppers by encouraging participation in a “Save £1 A Day” challenge.

Customer insight

“Understanding how customer behaviour is changing and being able to respond quickly has never been more important than in the current economic environment,” the supermarket chain noted.

In order to better capture the feeling of their customers they developed Asda Pulse of the Nation – a panel of 16,000 shoppers, ‘Tell ASDA’ – an online survey where customers give feedback on their local store, and ‘Saving You Money TV’ – an interactive YouTube channel that allows customers to submit their own money saving tips and ideas.

“This customer insight has a direct impact on product innovation and offer,” Asda advised. “When customers said they wanted Easter to be a family celebration, it developed a broader selection of offers to enable them to feed, clothe and entertain their entire family.”

It also led to them discovering the desire of customers to gain new inspiration for home cooking. This will see them introduce new recipe ideas that feed a family of four for £1 a head including turkey stir fry and salmon pie. The move is representative of the trend toward supermarkets offering alternatives to restaurant and take-away fare. Already, Coles has reported success with a ‘Feed your family for under $10’ campaign, which followed the similar ‘Feed your family for a fiver’ promotion by Sainsbury’s in the UK. In fact, so common has the push toward offering in-store advice for cheap and simple family meals become, that Marks & Spencer boss Sir Stuart Rose recently dubbed it “the most aped promotion of any promotion around“.

“Customers continue to tell us what’s important to them, and we have hit the sweet spot by finding the right balance between lowering prices, improving quality and reducing our costs,” ASDA’s Chief Financial Officer, Judith McKenna, suggested.