PESTEL analysis of Asda
This article offers a detailed PESTEL analysis of Asda. PESTEL analysis is a very important framework for strategic planning. It is used by strategic planners to analyse the macro-environmental factors that affect a business. It stands for Political, Economic, Social, Technological, Environment, and Legal.
Asda is a British supermarket chain, owned by Issa Brothers and TDR Capital (majority shares). It is the 3rd largest supermarket chain in the UK and offers a wide range of products, both in-store and online.
Political factors that impact on Asda
National, and international regulations and directives concerning employment, legislation, consumer rights, taxes etc. impact on Asda like any other organisation. Likewise, war and instability also impact on its decision-making. Consequently, it monitors political environment constantly.
Asda benefits from a relatively stable political environment in the UK. However, Brexit has created a lot of uncertainty. Asda like any other organisations must think of future-proof supply chain in response to Brexit.
It is worth noting that the recent deal (Windsor Framework) between the UK and the EU has been a source of hope for both parties. It keeps Northern Ireland inside the EU’s single market for goods and aims to reduce the frictions on the Great Britain-to-Northern Ireland trade (Campbell, 2023).
Economic factors that impact on Asda
Economic discussion is a key part of this PESTEL analysis of ASDA. Asda needs to consider economic factors such as cost of living, pay level, cost of credit, competitive pressures, labour supply & demand, energy prices etc. These economic factors impact on its pricing strategies significantly.
High cost of living impacts on consumer behaviour. Many people are currently struggling and paying more attention to their personal finances. Many are indeed cutting back on activities such as shopping, holidays, and leisure (PwC, 2023).
Social factors that impact on Asda
Social changes e.g. ageing population, celebrity following, and healthy lifestyle are important for Asda. Understanding social factors helps it introduce new products/services in the market. It also helps it develop its segmentation strategies.
The demand for organic, vegetarian, and vegan food is growing very fast. The demand for certain ethnic foods is also high in the UK and many other countries. It is worth noting that Asda sells a huge number of products that cater to a good number of ethnic groups (Asda, 2023).
The key categories for ethnic foods at Asda are Asian Food, African & Caribbean Food, Mediterranean Food, East Asian Food, Polish Food, Halal, Kosher, and Local & Regional Food (Asda, 2023).
Technological factors that impact on Asda
Technology is the next issue to discuss in the PESTEL analysis of Asda. As the use of technology is ever growing, superfast broadband and mobile apps along with click & collect delivery services are extremely important for Asda.
Asda has been using technology to improve the shopping experience for its customers and to make its operations more efficient and sustainable. Indeed, all big supermarkets are constantly working on how best to make use of technology in their favour.
Asda has a comprehensive online shopping service. Customers can browse and order products from the comfort of their own home and have them delivered to their door. It also offers a click-and-collect service, which allows customers to order online and pick up their order in-store.
Asda has developed a new mobile app (Scan & Go) that allows customers to scan items as they shop, pay for them, and have them delivered to their door. The app also allows them to order online and pick up their order in-store or have it delivered (Asda, 2023).
Environmental factors that impact on Asda
Green economy, pollution, carbon footprint, hazardous waste, organic foods are important issues for Asda. As people are now-a-days very aware of the impact that organisations have on the environment, there is a significant amount of pressure on all companies to operate in an environmentally friendly manner.
Therefore, Asda must demonstrate that it is an environmentally friendly company. It has indeed set some excellent visions for 2040 e.g. net zero carbon emissions, and a zero waste world, and carbon neutral baskets that can save customers money (Asda, 2023).
Legal factors that impact on Asda
Legal environment is the final part of this PESTEL analysis of Asda. Asda must abide by the government and industry rules and regulations, as any breach may result in punitive actions by relevant authorities. For example, it cannot pay any employee less than the minimum wage in the UK.
Likewise, it cannot dismiss an employee unfairly. Should it happen, the employee concerned can take it to an employment tribunal. It should be mentioned that Asda was fined in the past for food safety breaches.
Summary of PESTEL analysis of Asda
Asda is now experiencing huge changes in the grocery sector. Some of the significant changes are pointed out below:
Smaller size operators like Lidl and Aldi have shaken the whole industry through their disruptive innovation.
ASDA is no more the cheapest supermarket although ‘always low prices’ is their unique selling point. In fact, Lidl and Aldi are well-known as discounters.
Online shopping markets are increasingly becoming popular to customers with busy schedules.
Due to a range of other changes in the external environment, Asda needs to develop new strategies to survive and retain its customers. It came into media recently that Asda is ready to trigger a supermarket ‘nuclear’ price war to end all price wars. Is the price war going to be enough for it to beat competition? Time would tell. Let us wait and see.
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Last update: 28 February 2023
Asda (2023) World foods, available at: https://www.asda.com/creating-change-for-better/better-planet (accessed 28 February 2023)
Campbell, J. (2023) Brexit: What does Windsor Framework mean for business? Available at: https://www.bbc.co.uk/news/uk-northern-ireland-64793597 (accessed 28 February 2023)
PwC (2023) How the cost of living crisis is changing people’s behaviours and their spending, available at: https://www.pwc.co.uk/services/risk/rethink-risk/insights/how-the-cost-of-living-crisis-is-changing-people-s-behaviours-an.html (accessed 27 February 2023)
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Author: Dr. Sewel Sodry
Dr. Sewel Sodry is an internationally acclaimed author and teacher of business management. He is also a specialist coach, trainer and educationalist. He holds a Master of Business degree from Victoria University, Australia and a PhD from King’s College (University of London).