It says a lot about Asda that there is no easy link from their Asda.com homepage to press releases and information about the business. They are a business that is built on spin – whether it be the internal brainwashing of their colleagues or the incredible lengths they go to in the stores planned for Wal-Mart analyst visits. And now, after using the expensive brains of McKinsey to come up with a new strategic 5 year plan, Andy Clarke is revealing his vision.
And to be honest, I’d be asking for a refund from the consultants!
As ever, price is at the heart of their response to the threat of the discounters with a £1bn investment promised over five years to make them 10% cheaper than their competitors and a dig at competitors’ “gimmicks” of price-matching vouchers. Of course, Asda have been “10% Cheaper Guaranteed” for a few years now, but that clearly wasn’t a gimmick. Actually, with them admitting to being 6% cheaper, it was a lie and goes some way to demonstrate their contempt for their shoppers. After all, the Tesco and Sainsbury’s gimmicks give you a voucher on the spot, while Asda disenfranchises those without access to the internet and their own printer when they fail on their promise. In other words, the people who need the cheapest prices can’t get them – this isn’t redefining value, it’s creating natural selection.
When Andy Clarke took over the top job back in 2009, he made a big fuss about the huge strides that Asda had made with the quality of its own label products, relaunched under the “Chosen by You” brand (or “It’s all YOUR fault, deal with it” as I call it). So, why the need to invest another £250million in quality now? Again, those pesky discounters could be to blame! Aldi have a very pragmatic policy towards their range – identify the foods that matter the most to shoppers, try to source a private label manufacturer who can match the quality of the leading brand and then, crucially, if they can’t then go and list the brand itself. This is a real game changer for the traditional mults and is at the heart of why the discounters are very difficult to beat once one turns up in your neighborhood. Asda have made some big strides in their own label offering, although their lack of ranging nouse means that they often create wonderful new niche foods while ignoring the core, in particular on fresh.
I worked at Asda for 5 years, during which time Andy Bond announced 100 Essentials stores, 200 “Market Town” small supermarkets, 200 Living stores and 5 C-Stores. In the end, there 5 market town stores and Living was up to 25 in total. Of course, that’s all in the past, so Andy Clarke announcing 1000 click & collect sites is entirely plausible – well, at least to my former colleagues in Asda House who are still under the spell of the Cult of Asda! They should be given credit for trying with Click & Collect, although my experiences with the non-food and clothing side have been invariably chaotic at store level, while the idea of a grocery van being parked up outside a store is ludicrous when you compare it to the smart little huts Tesco are using. I’ve used the PFS sites in Sale and Leeds and they are “ok”, but nothing to write home about and the store operation seems to be hamstrung by the usual Asda issues with ranging driven by dogma, rather than shoppers and availability. The plan for C-Stores that I mentioned earlier was brought to an abrupt halt just a month after their announcement after the realization that the Asda distribution model is designed exclusively around moving pallets of stock from big warehouses to big shops. I’m sure some improvements have been made, especially with the establishment of the Supermarkets format, but can they really service c-stores? And more importantly, can even their infamously creative store accounting procedures make a shop that just acts as a pick-up point appear profitable to the Bank of Bentonville?
Of course, Asda has a bigger need than most for a dot com grocery offer as it gives a unique benefit of not having to visit their stores. Morley in Leeds has recently had a refit and, apart from some green paint on the walls and black shelves replacing grey ones in the bakery, it’s the same old poor shopping experience with operational efficiency being put way ahead of shopper needs. Pleasant looking, well-lit Health & Beauty fixtures still have top-stocking shelves full of cardboard boxes above and merchandising is designed to hammer home “value” rather than help shoppers find what they’re looking for. The non-food area has been relaid with tangential fixture flows and rather than tempting shoppers in, it now heards them through and makes the admittedly good looking produce and counters area, virtually invisible. If your shops are actually worse than the stripped-down Aldi and Lidl stores, then why would you expect NOT to lose shoppers? If we believe what Asda are telling us about the performance of online and Supermarkets, then it doesn’t take a genius to work out that they’re superstores are failing desperately.
Ah yes, Supermarkets – the greatest spin of all! Andy Clarke has a lot to lose personally if the Netto acquisition was ever to be revealed as the abject failure it has been. The Supermarket format is growing, but closer inspection of the detail generally shows that it is the pre-Netto stores that have been added to the format’s numbers that are driving the performance. These stores, many of which were former larger Co-ops, Kwik Saves and Sommerfields acquired in the mid-2000s are good, compact stores in good locations – so it’s not surprising they are doing well in an environment where increasing number of shoppers are rejecting hypermarkets. Asda apparently had a pipeline for their “market town” stores which would have been a far sounder investment than Netto, but short-termism crept in and they’ve ended up with a poor portfolio of stores which, some might argue, dragged them down into the discounters’ arena.
The last time I offered an honest opinion to Andy Clarke, he turned red and shouted at me, but I don’t let things like that worry me, so here’s MY 3 point plan for making Asda a real success and stopping JS taking their number 2 spot:
1 – Get the basics right – that’s core range, shop standards, natural customer service, availability
2 – Leverage their hero departments – In-store bakeries head and shoulder over the rest, George clothing, Home essentials
3 – Dial down the price message – after 14 years of successfully manipulating the Grocer33, shoppers KNOW you’re cheap and don’t need it rammed down their throat
Of course, Andy Clarke doesn’t need my advice, not do they need proper growth as long as the profit margins keep skyrocketing. It would be nice to see some effort to contribute to a better retail environment though, wouldn’t it?