As well as offering low prices, Asda and Morrisons have improved their ranges - to dramatic effect, says Nick Harrison

Over the past three years, Asda and Morrisons have made big gains in market share - an impressive feat as it has been achieved without aggressive store expansion.

Tesco is still a much larger player, with a rapidly growing portfolio of businesses alongside its supermarkets; and Sainsbury’s has itself done a lot to reverse the sales decline of previous years. But it’s hard to deny that lately most of the big UK grocery success stories have been written in Leeds and Bradford.

The recession provides an intuitively obvious justification: ‘value-driven shopping’, meaning that lean times automatically benefit those grocers with a longstanding reputation for cheap prices. But this is only part of the explanation. Price is indeed a stronger determinant of store choice than it was in previous years, but other aspects of the retail offer still dominate even in a recession ­notably product quality and breadth of range. And this is why the story of Asda’s and Morrisons’ success is interesting. When we measured shoppers’ perceptions of different grocers in 2009, we found the grocery marketplace had been changing in a significant way.

Three or four years ago there was a wide gulf between customer ratings of the quality and choice offered by Sainsbury and that offered by Asda and Morrisons but the gap has since narrowed dramatically. M&S’s and Waitrose’s quality perception advantage over the big four has also been cut back.

In contrast, customers continue to rate the different competitors very differently in terms of value for money. Asda and Morrisons have made impressive progress in building a reputation for quality while at the same time maintaining the perception that they represent better value than anyone except the discounters. Both players are now rated more favourably than Tesco on most aspects of product quality, choice, and service. And in certain areas for instance, food counters at Morrisons, or frozen food at Asda one or other is perceived as better than Sainsbury’s, too.

If this sounds hard to believe, consider the changes Asda and Morrisons have made. While Asda has continued to hammer home its value message with price-focused advertising, at the same time it has been steadily working to improve its product offer and customers have noticed. Morrisons has also improved its range and begun communicating the provenance of its products both in-store and through advertising, completely transforming its reputation as well.

Of course, this would be of purely theoretical interest if customer perceptions didn’t influence market share but there is a strong link between the two. Differences in shopper perceptions go a long way to explaining differences between the sales performance of closely located competitors. As you might expect, success in a mature, highly competitive market comes primarily from satisfying customers better than other retailers.

In short, the market share gains posted by Asda and Morrisons are the result of sustained efforts to build an image for quality and choice, not just an outcome of the economic downturn.

Anyone expecting those gains to disappear when economic growth returns might be in for a surprise.

Nick Harrison is UK retail practice leader at international management consulting firm Oliver Wyman.

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