Asda Keep On Spinning As The Ship Sinks

Regular readers, if there’s any left since I stopped blogging so frequently, will know I’ve long been critical of Andy Clarke’s leadership of Asda.

As he is forced to admit that their performance is below par, even by the low standards being set by the Big 4 these days, all the years of spinning to try and claim that Asda is a viable strong and growing business are coming to an end. Surely?

The alarm bells really started ringing when the over-active PR guys at the Green Pleasure Palace started highlighting double digit profit growth which seemed at odds with their, at best, stagnating market share being shown on Kantar data. As Tesco have spectacularly shown this year, chasing only the bottom line is a dangerous and inevitability futile task in grocery retailing. That’s been true before the discounters arrived on these shores as a handy scapegoat. Although I can’t help but wonder how much of that profit growth was from the decision to ditch their famous “end with a 7” pricing policy and decide to end with an “8” – the number once described by Darren Blackhurst as “fat and unappealing”.

Unlike Tesco, Asda neither has the reach in terms of shops nor the same level of general goodwill that Tesco used to enjoy from the public. Despite the pictures of smiling, happy, and sometimes dancing, colleagues pumped out around Asda House in a way that North Korean State TV would be proud of, the reality in stores is generally the opposite. Undertained, poorly motivated and badly led colleagues usually lead to at least one piece of bad service on every visit. I can’t think of any other retailer where I’d see a department manager effing and blinding to one of his team on the shopfloor that he didn’t have enough department hours to fill the shelves that week. 

Andy Clarke’s most famous spin is that Asda “don’t do gimmicks”. Well, unless you count putting up a 97p bucket to £1 to get it onto a promotion end as they did in 2008 because it’s a “round pound”. Or Rollbacks which Asda insinuates to its customers are permanent but are generally 12 week promotions. Or the biggest gimmick of all, “Asda Price Guarantee”.

Again, my disdain for APG is well documented – not inclusive (not everyone has printers at home), not instant (next day) and, largely, not actually true. They are often cheaper, usually through clever basket manipulation about what counts as a fair comparison or not. Even then, rarely 10%, so APG is basically a targetted coupon given to every customer who spends enough money and has a printer. It keeps some punters coming back, so fair play then.

APG reminds me of the Grocer33 mentality of the High Noon meeting which used to happen (I won’t say it still does as it’s now 6 years since I escaped from Asda, but given Clarke’s obsession with Asda culture, I doubt it has changed!). Senior managers would be castigated on any week that the G33 had gone to a competitor. All long-term pricing strategies were out of the window by mid-afternoon to get the pricing in line. If only they had that level of dedication to real customers!

Clarke is tending to blame discounters for the performance, back in November describing them as a “shockwave” in November last year. Must have been a shock to a man who was COO of a business that tried an anti-discounter format back in 2006 (a Mr. A. Clarke, possibly a relation).

Asda – who in 2008 were saying “this is our time” – have a fundamental problem which Andy Clarke has spectacularly failed to tackle; what are they here for? They gave up attempting to be a true mass market retailer when they dumbed down their ground breaking 3 for £10 wine offers and embarked on suicidal less-is-more ranging strategies. Asda is only about price and people now tend to believe the less dogmatic and thereby seemingly more honest pricing policies of Aldi and Lidl. 

Their stores have ceased to be relevant – there’s been some great work done on George and, to a lesser extend, in General Merchandise, but their food halls are still deeply unappealing places which really don’t showcase the product well. It is a pity as they do still have great bakeries (second only to Morrisons in my opinion) and their counter offers continue to be strong. But why would you go to a larger Asda store to see a shrunken range merchandised not too disimilarly to an Aldi when you could go to an Aldi? Oh, and Aldi staff seem to be way more committed to their cause than Asda do.

Asda need to watch out – Sainsburys continue to close in on the number two spot, while Morrisons aren’t likely to carry on as a lame duck once Potts and Blackhurst get going in Bradford. Meanwhile Aldi and Lidl are bullish and creating more space for General Merchandsise which further erodes the need for Asda.

Clarke better hope and pray that George don’t have a bad season in the coming year – that could finally end his lacklustre tenure.

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