Whilst it is true that retail, and in particular, grocery, is very cyclical in nature, Asda stand out as a business stuck in a time that has long past. I’ll admit that it’s been some time since I last stepped into the HQ of a grocer, but the evidence suggests that the green pleasure palace on the banks of the River Aire won’t have changed much. Images of dutiful colleagues celebrating another quarter of declining market share were published on LinkedIn as the Asda spin machine once again tried to hide the fact that they are in freefall. When I left the business back in 2010, they had two aims – to be number 2 in food and number 1 in non-food. Since that time, Sainsbury’s have taken the number 2 slot while a new generation of discount variety stores and the hugely ambitious Primark have pulled the rug from under their feet.
It’s easy to argue that Asda’s core business has been impacted solely by the rise of the German discounters. Certainly, it’s something that has been causing them sleepless nights for sometime, with projects such as Asda Essentials back in 2006, and the misguided purchase of Netto in 2010, aimed at stopping the discounters in their tracks. However, even with the seismic changes in the shape of the grocery market over the last 10 years, what sets the “Big 4” apart from the rest is choice, shopper experience an appeal that crosses demographics. If you’re not doing that, that leaves you exposed to the new raiders in town.
My previously discussed idea that the way forward for the big 4 was to focus on stealing each other’s shoppers rather than trying to beat discounters while still shackled to a model based on large shops and branded goods is proving to reap benefits for Morrisons and Tesco in particular. They appear to have stopped the loss of market share and, whilst not abandoning price, they have focused on their strengths and how they compare to their peers. Asda have had some quite disastrous range reviews where so much range has been culled, many shoppers – myself included – can’t actually buy what they want. To have that situation in a retailer with a very high proportion of its stores over 50,000 square foot is not viable. At risk of repeating myself, why would you go to a shop 4 times as large as an Aldi to get the same choice?
Asda are also becoming a victim of geography. While they have almost doubled their number of sites in the last 10 years, much of this was driven by the Netto acquisition which delivered generally poor locations on low-grade retail parks. Aldi and Lidl’s strategy of rapid expansion in the heart of residential areas – and often new housing developments – has helped them get closer to Asda’s core shoppers. Asda traditional returned a huge sales per square foot compared to their competitors, but the top 9 retailers have added over 4,500 stores since 2007 and making big sheds work isn’t the holy grail it once was. Location has always been a key factor in the success of a store – with even more stores, and with fuel costs encouraging more shopping closer to home, it’s become even more important.
Asda also never succeeded in their aim of “turning the map green” as the following heat maps show. They may have stores across the country, but there’s still too much of a concentration in their traditional heartlands of the M62 corridor. Contrast that to the truly national spread of Aldi and Lidl and the problem is all too clear. Whilst they lack the density in some areas, they have a national coverage which gets them closer to more customers.
Shoppers also actively encourage their arrival – my village is normally livid if a multiple operator wants to open a site as Dominos Pizza will tell you, the development of a new Lidl was welcomed with open arms. I doubt that reaction would have been the same if Asda had proposed a Supermarket on the same site. I also doubt we are alone in this attitude.
The Asda brand is tarnished, some would say beyond repair. A lot of this is caused by great ideas being poorly executed. All the following photos are good initiatives, but let down by a lack of care. And food products – even health ones – NEVER look good on fixtures designed for health & beauty.
Whether or not this has been caused by brand dogma, poorly skilled store managers or the curse of the “Every Day Low Cost” mantra, the shopper won’t be interested.
During my time at Asda, one year’s gimmick was a 5ft high 9 piece jigsaw with a mirror at the centre. The idea was for managers in the business to “look in the mirror” to see how to grow. This is needed now, as is looking at their stores and pushing them to improve standards. But most of all, the leadership at Asda need to get away from just looking at the last line on their p&l sheets and focus on their shoppers. Get the basics right, get the range right, bring back the pocket tap and relaunch the brand.
Or rebrand the entire business as WalMart and start all over again.