It’s rather difficult to think of Asda these days without blowing out your cheeks and asking why they thought it would be any different.
Today’s result – a 5.8% slide in third-quarter like-for-likes – confirms what we already knew: too many customers have lost faith in the store and once price advantage had been eroded and bettered by discounters, no loyalty was shown.
With such soft comparison figures now being annualised we can expect the market share data will be a more objective measure.
Lots of miserable sales results were not helped by press commentary on strategic turnarounds on price guarantee, click and collect, petrol station convenience and bad news on home shopping hygiene and card payments.
They are linked of course.
It comes down to a leadership team asked to deliver profit and doing so, at the cost of market share, talent erosion and poor standards.
Oh Walmart; be careful what you ask for.
When you used to ask about return on investment in the days of Tony De Nunzio and Andy Bond, there were stern arguments back about the strength of competition and the pioneering aspect of UK retail.
Profit was never an issue and the targets were met, but not at the cost of everything else.
Leadership changed and the ‘Walmartisation’ of Asda became more apparent to all.
The discounters highlighted a weakness that was already there and the lack of response, beyond a rudimentary price reaction, was not good enough.
Hamstrung and losing talent, things went from bad to worse between 2014 and 2016.
Now with Sean Clarke replacing his namesake, the struggling retailer is looking to fight back and regain some market share, possibly at the cost of profit.
There’s little evidence yet that any significant changes have been actioned.
The strategic direction is no doubt still tightly controlled by Bentonville USA and although they want to see a phoenix-like improvement in Asda’s health, they will need to allow Sean Clarke a longer leash – one he deserves.
Shift away from price obsession
The old emphasis on price almost to the exclusion of everything else seems to have been surrendered and although the new Christmas commercial is awful, at least it is not trying to recapture an already lost price position.
Clarke will have to think a lot more about the way his team win back the lost confidence of customers, and his vision of what Asda should become will be key to this.
If he thinks he is going to make a Walmart in the UK, he is going to find it hard going.
Former Sainsbury’s executive Roger Burnley, who started as Asda’s chief operating officer last month, should be making his contribution.
Burnley’s recent experience at Sainsbury’s, where price is not the be all and end all of the proposition, even in a price war, will be important.
There is no doubt that Asda will come back. The question is: when and will Walmart allow Asda to be as good as it should be?
- Phil Dorrell is a partner at consultant Retail Remedy