Andy Bond will leave his successor with two big headaches: How Asda can arrest its underperformance and can a food retailer prosper on Everyday Low Prices alone?
“Walmart would desperately have loved me to stay. You can ring and ask them if you want.”
He’s never been one to lack self-assurance, but even so Andy Bond didn’t sound like a man who had been pushed from his job this week. While the past few months have been tough, overall his five years at the helm in Leeds have been a success, and his promotion to chairman - even if it turns out to be a short-term sop - shows that his status as one of Bentonville’s favoured sons remains little diminished.
Even by the standards of retail leaders, Bond is ultra-competitive and having declined to move overseas, there wasn’t anywhere else he could go with Asda. He will have seen how predecessors Tony DeNunzio and Paul Mason have prospered in the private equity world, and he should have plenty of options having decided to follow Allan Leighton in “going plural”.
What will disappoint him is that he will leave his successor with two big headaches. The first is how Asda can arrest its underperformance since Christmas. While it suffered in the snow because it only has big stores, there is a more fundamental question that needs to be answered, which is that in the age of the Clubcard, can a food retailer prosper on Everyday Low Prices (EDLP) alone?
All Asda’s rivals are, to a greater or lesser extent, using loyalty as a tool, and as Tesco showed when it switched on its double Clubcard points promotion last year, the ability to step up the benefits and throw money at shoppers when the going gets tough is a trump card that Asda can’t use with its reliance on price alone.
The other big question is around Asda’s ambition to become the UK’s biggest retailer in non-food. If it is going to get there it needs to do a deal and this week the stories about an acquisition - this time of Home Retail - surfaced again. Any plan will only be at a nascent stage - it would be an odd move at a time when the chief executive is leaving - but there is no doubt there has been real consideration of an acquisition over a period of years at Asda.
Asda doesn’t have great form when it comes to growing organically with new formats - remember Asda Essentials or the George standalone stores? - so an acquisition of a business that has two proven models would be appealing.
Argos would give Asda high street presence and a strong multichannel offer, complementary to its existing business. And if it did happen, Asda would definitely be needing the services of its new chairman.