Asda started the New Year with a new boss, after former chief executive Sean Clarke’s right-hand man Roger Burnley stepped up earlier this week.
Having rebuilt firmer foundations and returned to sales growth under Clarke, who formerly ran Walmart China, Asda is now targeting further momentum under Burnley’s leadership.
Retail Week takes a look at what Burnley’s priorities will be as the grocer steps up its turnaround efforts in 2018.
Establish and communicate unique selling points
After having the grocery price-leader crown swiped from it by the discounters, Asda has felt more pain than most from Aldi and Lidl’s relentless rise.
Asda’s messaging and reason for being had long centred on price, but as the German duo rapidly expanded their UK footprint – and wooed more and more shoppers with lower prices – the Walmart-owned chain’s sales line plummeted.
Sean Clarke was given the green light by his Bentonville paymasters to close the price gap with discount rivals via some heavy investment, but price can no longer be Asda’s unique selling point.
“The price messaging is fairly hollow when you contrast to Aldi and Lidl. The other attributes they can bring to the fore are service, availability, range and quality”
Bryan Roberts, TCC Global
Burnley, therefore, must work hard to establish and communicate the non-price advantages Asda brings to consumers.
“Yes they are the cheapest of the big four, but that leaves their USP as being the third-cheapest in the broader market, which isn’t a compelling positioning to have,” TCC Global’s Bryan Roberts explains.
“The price messaging is fairly hollow when you contrast to Aldi and Lidl. The other attributes they can bring to the fore are service, availability, range and quality.
“A lot of their [Christmas] seasonal ranges, product innovation and premium lines were quite impressive. They have got a good story to tell there, but it needs to be communicated.”
Improve store standards
Despite Clarke placing customer service towards the top of his agenda during his time at the helm, there remains room for improvement.
Asda has made numerous cuts to the store workforce in recent years and, consequently, shopfloor staffing can sometimes appear threadbare, making it difficult for employees to offer the service that the modern, time-pressed customer demands.
“Visits to a clutch of Asda stores over the Christmas period also threw up a few examples of untidy shelves and aisles, hindering the shopping experience”
Visits to a clutch of Asda stores over the Christmas period also threw up a few examples of untidy shelves and aisles, hindering the shopping experience.
Roberts describes the issue as his “main worry” for the retailer.
“Standards can be a little bit patchy,” he suggests. “I know there has been a lot of headcount reduction, but some of the George sections looked like a bomb had gone off, in all honesty.
“Yes, they had obviously been aggressively shopped, but there are some basics that need rectifying.”
Ramp up multichannel credentials
Asda’s parent company Walmart dropped ‘Stores’ from its name at the back end of 2017, as it continues to transform its business to better compete with Amazon.
And Asda has been on a similar journey to establish a competitive online offer, having invested in its own website in recent years.
“Walmart’s click-and-collect towers are starting to pop up in Asda stores, but there could be more innovation to come with McWilliam’s input”
The news that Rob McWilliam, a former Amazon UK big-hitter, has returned to Walmart to advise Burnley on a part-time basis has set tongues wagging about the sort of multichannel initiatives Asda may have up its sleeve.
Walmart’s click-and-collect towers are starting to pop up in Asda stores, but there could be more innovation to come with McWilliam’s input.
Raise staff morale
Prior to Clarke’s arrival, confidence at Asda House was fragile at best.
In the dark days of early 2016 – like-for-likes plunged 7.5% in the quarter to June 30 that year – insiders told Retail Week the mood was “like being in a council meeting” because “no one wants to make a decision”.
A return to sales growth has lifted spirits, but there is more work to do.
“Morale within the grocer ‘is still at a low ebb because of the amount of churn at head office and in stores’”
One source close to the business suggests that, despite stabilising top-line performance, morale within the grocer “is still at a low ebb because of the amount of churn at head office and in stores”.
Another change in chief executive might not initially add to the desired sense of stability, but those close to Asda have described Burnley as “a popular figure” both centrally and in stores, and someone who “gets things done and can make things happen”.
Such people skills and conviction could empower his senior team and store managers, and instil a greater sense of belief – both of which will be crucial in Asda’s ongoing turnaround efforts.
Reallocate store space
Asda has already kicked off efforts to revamp its supermarkets, but insiders suggest further investment will be ploughed in by parent Walmart this year.
Those familiar with the business believe that capex will be focused on improving Asda’s stores, rather than embarking on the sort of M&A activity pursued by big four rivals Tesco and Sainsbury’s.
“Asda is attempting to beef up its credentials as a family-friendly and community-focused retailer”
Asda has already partnered with retailers such as sports and leisure giant Decathlon, fast-food titan McDonald’s, Johnson’s dry cleaners and hairdressing chain Supercuts to better utilise space in larger sheds.
Yet Roberts believes a more “substantial recalibration” of supermarkets is required in order to provide shoppers with “more reasons to return”.
Asda is attempting to beef up those credentials as a family-friendly and community-focused retailer through other non-food propositions such as trampoline parks and opticians.
And in locations including its Watford supercentre, Polish delicatessen and Halal butcher counters have been introduced to better cater to its catchment.
Burnley will be keen to carry that baton into 2018 to win back a greater share of the customer wallet.