Asda is trialling bulk buys in 10 stores. With Tesco also evolving its own bulk buy concept, will shoppers be keen to fill their shelves?
Last week, Asda revealed plans to roll out a trial of bulk buys to 10 stores, in the latest evolution of its Deal Depot format.
Following a successful trial in Cardiff, up to 30 bays in existing Asda stores will be turned over to the bulk buy concept. It’s an interesting development, particularly in the light of Tesco’s bulk buy moves.
But it’s difficult to assess whether this represents an expansion or retraction of Asda’s wholesale ambitions – or whether it is simply a way to fill up space in large stores. So what’s it all about?
Asda first dipped its toe into the wholesale market in December 2019, when it annexed 20,000 sq ft of its hypermarket in Patchway, Bristol to become its first, and to this day only, The Deal Depot.
When it first opened, the Patchway store featured a 450-strong range, focusing on key brands across BWS, soft drinks, snacks and confectionery by the case, plus bulk packs of both branded and tertiary lines across dry grocery, household and personal care. There was also a frozen and chilled section, as well as an aisle for fresh produce in regular retail pack sizes.
“Devoting excess space to more productive use is a key priority”
It’s perhaps unsurprising the concept has not been a major focus for the retailer since then. It has, after all, had a global pandemic to contend with over the past 20 months, as well as its recent takeover by the Issa brothers and TDR Capital.
As that upheaval subsides, Asda would not be drawn on whether it plans any further standalone stores. But it seems confident in the push into bays – which it says is being driven by consumer demand for larger packs and the savings that accompany them.
“Following a successful trial at Asda Cardiff we’re evolving the bulk buy concept to offer a range of bestselling and popular products within a further 10 stores,” says Debra Lees, Asda senior director of wholesale and convenience. “These stores will receive selected bulk lines such as Nicky Elite toilet roll, Fairy Platinum dishwasher tabs and large boxes of crisps, which help to fulfil a ‘stock up’ mission alongside our core grocery offer.
“The trial in our Cardiff store has shown there is demand from customers for bigger packs to help them benefit from even better savings when purchasing common pet, household, snacking and cleaning products in larger quantities.”
Asda’s bulk buying ‘learning curve’
Asda’s bulk buying journey is a learning curve, says the retailer. It has been from day one.
When it first launched the standalone The Deal Depot adjacent to its Patchway store in December 2019, it said the offer would evolve over the first few months, as it worked out the optimal range.
It used the word ‘evolve’ again when it took the concept from a separate store to an in-store feature as a trial in its Cardiff store in February. Again, key to the trial was figuring which lines worked best. The Grocer understands these are household, laundry, grocery and pet essentials.
In the latest version, launched last week, Asda is calling it a ‘test and learn’ trial – and is calling on shoppers to tell it what they want to see on the shelves.
Bulk buy aisles
The wider rollout is now well underway. Last week, Asda added a 10-bay aisle of bulk buys to its York store featuring 40 lines. Stores in Bootle, Milton Keynes, Toryglen and Dumbar-ton will each get a dedicated bulk buy aisle. The latter will be the biggest, with 32 bays.
A further five stores will test a smaller selection of bulk buy items that will be merchandised alongside smaller packs in the same aisle. The bulk buys will also be added to Asda’s online offer from those stores.
It’s reminiscent of Tesco’s bulk buy concept Chef Central, which has evolved from a standalone fascia attached to its larger stores to in-store bays.
The moves suggest there is customer demand – but industry experts are less convinced.
“I think the question you have to ask is: does it really make a significant difference to sales?” says Shore Capital’s Clive Black. “That may be why you don’t currently see a lot of footage dedicated to bulk in superstores.
“There are already operators out there doing this such as Costco and they do it very well. My sense is that the big grocery retailers are just playing around the edges on this.”
He adds: “The majority of households in this country simply don’t have the storage space for lots of bulk buying. They don’t have anywhere to put 200 loo rolls or big boxes of crisps.”
The Retail Mind founder Ged Futter agrees. “The move by Asda is just confusing. It won’t be something that appeals to wholesale customers and we know that buying in bulk has limited appeal to most customers. They need to have the money and the space at home.”
Bryan Roberts, founder of Shopfloor Insights, is more positive. He believes Asda’s move is grounded in the need to tackle excess space. “It sits nicely alongside its partnerships with the likes of Decathlon and The Entertainer,” he says.
“Asda is very well aware of the fact that some of its stores are too large, therefore devoting excess space to more productive use is a key priority.
“Deal Depot achieves this as well as adding much-needed differentiation and accentuates Asda’s value proposition.”
Rival moves
While the bays may be up for debate, not many experts are predicting a wider rollout of standalone bulk buy stores. Not least because the initiative clearly predates its new owners.
Should Asda wish to become more of a force in wholesale, it would start by linking up with the Issa brothers’ 300-plus EG Group forecourt network, they suggest.
“This has become even more of a priority given Sainsbury’s announcement that it will be withdrawing from wholesale, which affects a number of Sainsbury’s branded stores at a number of EG forecourt sites,” says Roberts, referencing its bombshell last month that it would shut down its wholesale arm to focus on its core grocery business.
Black also sees wholesale potentially becoming more important to Asda. For him, it is likely to remain a priority for those retailers with a significant existing presence – such as Tesco with Booker, Morrisons and its major contracts with McColl’s, and Amazon with The Co-op and Nisa.
However, “the low-hanging fruit retailers thought they could pick off isn’t really isn’t there,” he says. “You have to have a major acquisition.”
This is where the potential for an Asda tie-up with EG Group becomes interesting.
Granted, Asda won’t automatically gain rights to supply EG’s forecourts. After all, the businesses are still being run separately and EG has built its business by developing excellent sites featuring multiple consumer brands including Spar, Greggs, Starbucks and Subway, as well as more recently up-and-coming street food and foodservice operators.
But it will nevertheless be interesting to see whether such a supply deal could work. And whether the Issas prioritise bringing Asda’s pricing strength to EG, or sprinkling EG’s stardust on Asda. Either way, it could be a pivotal move.
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