Every little helps?

Based on article from The Economist, 3 October 2006

British shoppers nowadays look for more than price. Asda is a clear example of this change in shopping habits, which spells bad news for it's parent company, Wal-Mart.

Wal-Mart's entry into the British market when taking over Asda for $10.8bn is it's largest investment outside America and accounts for half its international income. It is also a litmus test to see whether they can keep customers rolling in with cheap prices.

Shopping culture in America is similar to that of Britain where customers want to shop in one place, which makes Britain a perfect opportunity. Wal-Mart did proper for some time which allowed it to seize a larger market share than Sainsbury's in 2003.

However, British shopping habits have evolved - Asda's unique selling point came from its cheap prices, but customers now look for something else. A major reason for this is that household expenditure on groceries now only accounts for 9% compared to 25% from four decades ago.

For a basket of 100 common goods, Asda's basket is cheaper by a mere 74p, which is far too small to be noticed. IGD, a grocery industry think tank say that 42% of customers look for price, which fell from 46% in 2003. Only 2% of Sainsbury's customers look for price while 31% look for quality products.

Another change in habits is the new idea of preparing meals yourself, going to restaurants and try new foods.

Tesco and Sainsbury's have fast increased their market share while Asda's dropped to 16.7%. Wal-Mart has said that their profits and sales targets have fallen.

Despite attempts by Adsa to regain some control of the market, it will be hard for them to reel in customers who have already been lost to other supermarkets.