Asda upbeat in a downbeat market

He said he regarded 2007 as a "vintage year" for the company, having achieved all its targets in terms of sales and profitability, and that it had enjoyed growth ahead of the market during the past 20 months.

"We've grown faster than all our competitors on total sales and like-for-like sales...with two million new customers added since 2006. We're in very good health with a strong base for future growth," he said.

The headline numbers showed Asda had delivered like-for-like sales growth (excluding petrol) in the "mid single digits" and in the "high single digits" for overall sales over the past 12 months.

He used the conference to "set the record straight" on what he regarded as a number of urban myths, including the belief that Asda is "downmarket and for people on low incomes". He suggested it now had the most representative customer base, which is closest to the UK average, among the four major grocers: "We're very represented in all the categories. It is very important and misunderstood that we represent the population."

This broadening of the grocer's customer base had been helped by it attracting AB shoppers at a faster rate than its rivals with 600,000 added over the past year. Highlighting this fact will undoubtedly help the company with its aim of selling its soon-to-launch customer panel data. This new initiative will aim to track the trends and shopping behaviour of 10,000 Asda customers.

"It's a big investment for us to launch a very robust customer panel that will provide insights that we will then share with suppliers to work out what's going on with consumers," said Bond.

The second myth he sought to dispel related to the widely held view that Asda has "struggled, and will continue to struggle, to grow" by highlighting that the company had accounted for 26 per cent of total new retail space added in the UK since 2002, which suggested the company had been "batting above its average".

And this looks set to continue in the future with the company adding between 10 and 12 new superstores, 10 Living stores and 12 extensions made to existing outlets over the next 12 months. This would be done in conjunction with the accelerated roll out of Asda's home shopping service to another 40 stores, which will provide coverage for 95 per cent of UK postcodes compared with a current 75 per cent.

Bond added that Asda Direct (its general merchandise home shopping operation) will also roll out during the year and that it represents "an even bigger opportunity than food online". He said: "It will be similar in size and shape to Tesco Direct and Argos." The prediction is that online in totality will account for a healthy £1 billion of sales by 2011.

One area that looks unlikely to feature in Asda's future is convenience stores. Although Bond did not categorically rule out opening such stores he made a particularly strong case against such a move. "People do not get how relatively unprofitable convenience is. As a shareholder it is a challenge to imagine investing in convenience because it does not deliver great growth," he said.

He provided evidence that showed convenience stores will likely account for only 10 per cent of sales growth in the UK retail market between 2006 and 2012 whereas out-of-town and online will represent 65 per cent and supermarkets 25 per cent. To ram home the point he said that for Asda an increase in like-for-like sales growth of one per cent is the equivalent to adding 10 new superstores or opening a massive 500 convenience stores.

The one area of the business that had been problematic during Bond's recovery phase was its George clothing division, which he suggested had been "off the rails" for two years but was returning back to its roots of catering for the core Asda family shopper.

Another so-called myth that Bond looked to dispel was that Asda had been losing some ground to Tesco and Sainsbury's over the 2005/2006 period with shoppers worth £850 million moving away from Morrisons during its troubled integration of Safeway.

Whereas 60 per cent switched to Tesco, 29 per cent to Sainsbury's but only 11 per cent went to Asda, he said this was simply down to geographical reasons and that it will be interesting to see if there is a reverse of this trend as a result of the current resurgence of Morrisons.

Commenting on the current economic climate Bond said it will be tough for all consumers - and not just for those on low incomes - and that it was the job of Asda to lower prices. "We're not passing inflationary increases on to customers. All those in the supply chain have a primary focus on looking at their own cost bases before passing on any increases. Our obligation is, as retailers and manufacturers, to put extraordinary effort on the cost base," he explained.

With this tough backdrop he believed this will be a year of value retailing with the lower priced operators performing better in the market. Because of this he said: "There is a divergence of performance and it will continue throughout the year."