IGD predicts that development of the UK grocery retail market will continue to be restricted by a combination of slow population growth, price competition and growth in the foodservice sector as an alternative channel. (Source from website http://www.foodanddrinkeurope.com/news/ng.asp n=61268-ASDA-reorganises-as)
ASDA is a household name in the UK. It has a range of products from groceries to clothing to jewellery. Bought over by Wal-Mart Stores in 1999, ASDA is the UK’s second-largest food retailer. It operates about 280 large stores (including 19 ASDA Supercenters and 10 standalone George clothing stores) and its focus is primarily on groceries and apparel. It also sells books and videos, household items and has a photo centre. It also offers ethnic take away meals. Its consolidation with Wal-Mart, has initiated a price war in the UK ASDA mirroring Wal-Mart’s aggressive "price-rollback" program and converting stores to Wal-Mart’s supercenter format under the ASDA-Wal-Mart banner. (Source from website http://www.hoovers.com/ASDA/–ID__90031–/free-co-factsheet.xhtml)
It ‘became part of the Wal-Mart family’ – on 26 July 1999 for $10.8 billion". Since then, ASDA claims that it has gained one million new customers. It is converting some stores to Wal-Mart’s super centre format under the ASDA-Wal-Mart banner. …
This price is on a daily basis and is not a sale or promotional price and customers come to ASDA knowing that they always have the lowest prices. ASDA states its purpose as "To make goods and services more affordable for everyone" It emphasizes that it wants to offer everyday low prices without compromising on quality and is on the lookout for new products and services that it can sell and in effect end up offering better value to the customer. (Source from website http://www.wherewomenwanttowork.com/evidence/evidence2.aspid=1220&.qid=1&.eid=890)
Michael Porters Generic Strategies for competitive advantage states that, "For an organisation to obtain a sustainable competitive advantage, they should follow either one of three generic strategies" (Porter, 1980)
Cost Leadership: In this strategy, the organisation tries to be the lowest cost provider in the business. This is achieved by keeping costs low right from production to the sourcing to labour costs. Huge volumes that compensate for the low margins and low cost achieve this.
Differentiation: In this strategy, organizations try to differentiate their products. By allowing the customer to perceive a differentiated value to the product, the organization is able to command a better price leveraging this perception. For this strategy to work, their product needs to stand out from similar products. However substitute or copied products pose the danger of upsetting the value of the product. Patents also expire and then the competitive edge is lost.
Niche Strategies: In this strategy, the organization caters to one particular segment and becomes well known for providing