'Asda is most at risk of customer desertion'

Asda is most at risk of customer desertion among UK grocers, says a recent report, stating that the supermarket has a younger audience than other retailers and younger shoppers are far more likely to trade down via switching retailers owing to cost of living squeeze.

GlobalData noted that because of price hikes, 23 percent of UK shoppers are trading down for cheaper products from the same retailer, while 29 percent are buying less overall.

Furthermore, under 35-year-olds are nearly four times more likely to engage in budgeting behaviours than those over 65.

Asda has a younger audience than other retailers, with only 33 percent of over 65+ year olds claiming to have shopped there in the past year – this compares to Tesco’s (59.6 percent), Sainsbury’s (57.0 percent), Morrisons’ (40.3 percent) and Aldi’s (40.1 percent) popularity with older generations.

“Younger shoppers are far more likely to trade down via switching retailers, buying less, and switching to cheaper brands than older generations,” says Amira Freyer-Elgendy, consumer analyst at GlobalData, adding that this demographic has less money saved up and are often less attached to familiar products.

“GlobalData’s research shows that women are more likely to take such budgeting measures, with less than two in five (17 percent) claiming that their shopping habits are unaffected by price rises,” Freyer-Elgendy added.

“This is in stark contrast to male respondents, which sees the response more than double to 39 percent.”

“The first quarter has been tough on Asda, and it stands to be one of the most affected retailers of downtrading due to its youthful and less affluent target demographic, so the remainder of 2022 will remain a challenge,” Freyer-Elgendy said.

“Its quarterly results (-8.3 percent) highlight an underperformance compared to the overall UK Food & Grocery market, which dropped 5.1 percent over the same period, according to GlobalData’s estimates, causing Asda to lose share to rivals, namely Aldi, Lidl and Tesco.

Freyer-Elgendy further added that Asda’s younger target demographic has supported a strong online performance, where sales have fallen just 11 percent versus 22 percent for the total online grocery market in the 2022 first quarter.