Asda is opening is first convenience stores outside a petrol station as its new owners search for ways to expand the UK’s third largest supermarket chain and overtake Sainsbury’s.
The two Asda Express stores – in Sutton Coldfield, near Birmingham, and Tottenham Hale, north London – will open before Christmas with 30 sites planned over the coming year.
Asda said it hoped to capitalise on an expected 13% increase in the convenience store market by 2027 to £50bn with an attempt to overtake Sainsbury’s to become the UK’s second largest grocer.
Sainsbury’s has been in second place since 2019 but is less than 1% ahead of its smaller rival in terms of market share, according to analysts at Kantar.
The two, which were blocked from merging by the UK’s competition watchdog three years ago, have long vied for the No 2 spot.
The shift into convenience stores in residential areas came after Asda’s new owners, EG Group, said it planned to open 200 Asda On the Move convenience sites on its petrol forecourts. Asda is also acquiring 132 convenience stores from the Co-op.
Asda has historically focused on large stores. It made a foray into smaller supermarkets in 2010 when it bought Netto’s 200-strong UK chain for more than £750m but these outlets were much larger than the planned Asda Express stores.
Asda is belatedly entering a highly competitive arena, in which Tesco’s Express and One Stop chains, Sainsbury’s Local, Little Waitrose and the Co-op vie for custom with the likes of McColl’s and thousands of independents, many of which trade under brands such as Londis, Spar and Budgens.
Morrisons, the UK’s fifth largest supermarket behind Aldi, has been expanding into the market, supplying independents under the Morrisons Daily banner, after an abortive attempt to run its own convenience store chain, M Local, in 2015. Amazon has, meanwhile, tested several checkout-free Fresh stores, where shoppers can pay via a phone app.
Rapid grocery delivery services such as Gorillas, Getir and GoPuff have also been touted as significant competitors to convenience stores but several have either closed, laid off workers or sold out to rivals as investors baulk at continuing to fund heavy losses.
Venture capital investment in rapid grocery businesses have more than halved so far this year, from $7.6bn globally to $3.6bn, according to the financial research firm Pitchbook.
Shoppers turned to small local stores during the Covid pandemic, creating a convenience boom, but the outlets have come under pressure as households seek bargains at hypermarkets and discounters.
Mohsin Issa, one of the billionaire brothers who bought Asda with the private equity group TDR Capital two years ago, said: “The launch of our first two Asda Express convenience stores is a landmark moment for our great business and a key step on our journey to bring Asda to more customers in more communities right across the UK.
“The stores have been designed to cater for a broad range of customer needs – whether that’s popping in for a pint of milk, grabbing a spot of lunch on the go or buying the fresh ingredients to cook dinner from scratch. We are confident customers will find everything they need in these stores and enjoy the convenience of having a new type of Asda store on their doorstep.”
Asda said its Express stores, which will be about 3,000 sq ft, would stock about 3,000 products including hot and cold takeaway food from its own brands, which include Leon. The stores will also offer a rapid delivery service through Uber Eats.
