- Walmart international boss says he is “very disappointed” with Asda’s sales
- Dave Cheesewright warns it will “take some time” to transform the grocer’s fortunes
- He adds Asda’s focus will now shift from protecting profits to stabilising market share
Walmart’s international boss has admitted he is “very disappointed” with Asda’s performance and warned 2016 will continue to be “painful”.
President and chief executive of Walmart International Dave Cheesewright said it would “take some time” to transform the embattled grocer’s fortunes following seven consecutive quarters of falling sales.
Asda boss Andy Clarke had labelled the supermarket giant’s 4.7% slump in like-for-likes during the 11 weeks to the end of June 2015 as its “nadir”, but sales have continued to nosedive since.
Fourth-quarter sales plummeted to a new low, declining 5.8%, before the retailer reported a 5.7% slump in like-for-likes for the first quarter of this year as it continues to suffer amid “fierce competition” from its big four rivals and discount duo Aldi and Lidl.
Speaking to journalists in Rogers, Arkansas ahead of Walmart’s AGM – which kicks off at 2pm BST today – Cheesewright said of the US retail giant’s international strategy: “We’ll be leaning pretty heavily to Asda. There’s lots of work going on there, but we are pretty dissatisfied with performance at the moment.”
Cheesewright said Asda’s sales trends had “changed quite dramatically through the first half of this year” after previously showing signs of stabilising.
“I was over in December reviewing the business and we were seeing comp declines looking like they were flattening out around minus 4% and the big players – the big supermarkets – coming together,” Cheesewright said.
“Then suddenly, from January, that’s diversed.
“The first reason is we have asked Andy [Clarke] to protect profit, certainly at the expense of share, and other than the last few months I wouldn’t change one thing about that.
“I think they did a very nice job for the first couple of years, we’ve just been surprised at how quickly that’s accelerated in the last two.
“The second reason would be around the competition. Obviously Morrisons is doing well, we know them well… and they are recovering nicely.
“Dave Lewis at Tesco is seeing some good volume recovery. So although the discounters’ growth seems to be slowing a little bit, when all four of the players in the main space are now appearing to be an EDLP low-cost retailer, I think you’re going to get quite an attritional environment with a lot of deflation and some real pressure on price.”
Shift in strategy
Cheesewright admitted “there are things we could have done better” and said Asda’s 18-month Project Renewal strategy was geared around “correcting those things” by cutting costs, slashing prices, investing in private-label products and bringing “fresh talent” including chief customer officer Andy Murray and incoming chief operations officer Roger Burnley into the senior management team.
“With the US business recovering, you can expect that we will shift the balance from protecting profit to protecting share,” Cheesewright revealed.
“There’s a lot going on, maybe too much, but we’ll keep them focused and I think it will take some time to turn it around.”
When pressed by Retail Week on how long that turnaround would take, Cheesewright quipped: “If I knew that, I’d be doing a different job.
“All I can tell you is life’s about momentum. When you’re at the minus five or six negative comps, you will go through a period where you do lots of things that in a benign environment would see you win – and it takes a while to turn the ship.
“That’s one of the reasons we’ve put a very experienced marketing director [Murray] in, because communicating the changes we’re making to customers among all the noise in the UK is going to be key.
“So watch this space on Asda, but it will be painful, I think, probably through this year.”