Monday, 17 June 2013

Asda - Death of A Mass Market Grocer

In the UK, we just love shops. We like Grocers who give us an experience and give us the chance to feel better about ourselves. Well, we used to - the unprecedented squeeze on household budgets over the last five years has made us seriously consider the idea of discounters and Aldi and Lidl picked the right time to go on a building spree to capitalise.

Asda, a retailer based on one trick only - Price - should have been taking advantage since 2008. A former board member proclaimed at the start of the recession that "This is our time". It's been anything but with a static market share which would be bad enough if they hadn't added over 150 new sites in the same period. Losing share at both ends of the spectrum would make most boards panic, but Andy Clarke has stuck rigidly to the same policy. This week though, in openly declaring a price war against the discounters, he's effectively killed off any ambition for Asda to be a true mass-market retailer.

There was a time, around 2007, when Asda were actually starting to attract ABC1 shoppers, largely through a dramatically improved range of wines and a hugely successful 3 for £10 deal across the category. But these shoppers, a big chunk of the UK grocery market, also demand shopping experiences. They are generally not big fans of soul-less barns - as their desertion of Tesco over the last few years has proven. To be fair, Asda have tried to make their shops nicer - the grey (sorry, "Taupe") walls have gone green and maroon while fridge carcasses have gone black. On non-food and clothing, they've actually led the way by bringing learnings in from their stop-start Living format. But while the new work looks very pleasing in some of the Supermarkets, the superstores and supercentres which deliver the big money remain hideous places to shop. In terms of major multiple refits or new stores of the last year or so - Tesco Bishops Stortford, Sainsbury's Welwyn Garden City and Morrisons St Albans all deliver a great shopper-focused vision of how retailing should-be. At Asda Trafford Park, we ended up with some low MDF cabinets for produce (plus the chilled produce black "maze") and the bakery fixture went from grey to black. No innovation, nothing for the shoppers apart the same tired message of engineered £1 price points.

It must interesting to see what McKinsie's are digging up. I really don't rate them highly myself - they are master in renaming solutions already found within in a business. But, in Asda, they might just work. During the 5 years I spent in the cultish world of Asda House, I worked with some of the brightest and most innovative retailers I have ever had the pleasure of working with. The problem was that inertia and an incredibly political reading of the "culture" at Asda House meant very few of those ideas ever saw the light of day. Often the mantra of "everyday low cost" was heard - certainly more than the question "what do our customers want?"

Well, yes, customers DO want price - and increasing numbers want this above all else. But if you are a retailer who wants to retain the number 2 spot, you can't just chase those customers. For every great piece of work that Asda do that might appeal to more affluent shoppers, for example the Leith tie-up with the ever-improving Extra Special range, going out and shouting out about prices and trying to attract the great unwashed will drive them back to Sainsburys, the expaning Waitrose or the resurgent (store-feel wise, at least) Tesco. For these customers tend to want a great experience - and, yes this is a harsh truth, they won't tolerate a scruffy shop if has scruffy shoppers as well.

Their mainstream competitors are getting it at the moment - all are investing in store environments, extending ranges to create points of difference AND still getting a price message across. You could argue that in times when price is so important to customers, you can assume that they will already find the value - and after about 15 years of "Price Wars" and the various Price Match schemes, they will now make their choice around the other stuff. The small, but growing, percentage who don't care about shops will head to Aldi and Lidl and won't even consider Asda any more. Those who do care, will see the further dumbing down and find somewhere they're more comfortable with.

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