Thursday, 25 August 2011

Just another couple of bits about Asda

It's been a while since my last blog - I was already to have a look at the indie grocers when the riots made the story out of date so here I am looking for another subject.

Now, I don't want to make this blog JUST about Asda. For one, they aren't the most interesting retailer at the moment and for two, I don't want to further upset their PR team who don't like criticism from anonymous bloggers who don't have any "facts"

It's true - I don't have "facts" but I do have grounded opinion. In fact, Andy Clarke's statement last week about the scaling back of the Living format expansion on the grounds of it being the wrong economic environment actually backed up my blog's opinion on the slow progress towards the 150 stores promised last year by Andy Bond to Walmart investors. Of course, a time of large vacancies on retail parks and a general downsizing of home and clothing spending in the UK is obviously the worst time in history to open a low cost home and clothing retail park format. Especially a year or so after heavily investing in a revamped store fit-out in their Stratford-upon-Avon and Teesside stores. Readers - you decide.

As for Supermarkets, two figures came out from Asda last week - turnover in converted Netto's is up 50% and SKU count is up from 2,500 to 10,000 on average. That's 50% more sales from 300% more products. According to Retail Week's Knowledge bank, an average Netto was taking £74k a week. Now, let's be generous and say that this year its £89k (ok, VERY generous). 50% increase in turnover is therefore an extra £44.5k per week in every converted store. That's £5.90 per SKU per store per week. That's not very good in anyone's books.

The shops themselves are fantastic and show that Asda now get the idea that offering low prices doesn't mean you have to make your customers suffer from a bad shopping environment. But the poor return from the new SKUs suggests they need to review their range selection strategy. Offering a full weekly shop to customers in small format stores isn't about pumping every single SKU into a shop, it's about getting the RIGHT SKUs that drive perception in. If you limit the SKU count, but get the right SKUs then you won't cause yourself availability problems either. Simple.

Andy Clarke clearly read the last blog though (note to Asda PR - this is a "joke") as he announced that he "wanted" 250 Supermarkets in the future. This is absolutely the right thing to do. I just hope it doesn't fall under the usual Asda policy of promising many stores - 100 Essentials in 2006, C-Stores in 2007, 150 Asda Livings in 2010 - which fail to materialise. One positive sign is that the latest incarnation of small stores at Asda was born out of the embers of the Essentials store in Pontefract which trialled the Supermarket format ahead of the acquisition.

A final footnote is a big "nice work" to Asda for the local music initiative. I do hope this is a genuine project that rolls out to more locations quickly. At the moment, it's a one store trial which could let more cynical people than me think it's a bit of diversionary spin released in a week of bad news. Asda used to be great at this stuff, forging links with their communities and generating genuine feel-good PR stories. Rolling out the local music is such a simple no-brainer and something close to my heart. Let's hope it works. If it does, perhaps it can improve the run-rate in the Supermarkets....

Next blog will be both quicker than this one was and also very much NOT about Asda - promise!

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