Is it too late for ASDA to reignite its innovation gene?

The limping ASDA ship has a new captain and for Sean Clarke’s first trading update, it could be no worse.

It is too soon for the new CEO to have had any significant impact but a 7.5% decline in like for like sales is apocalyptic. At least the statement has acknowledged that ASDA has a problem rather than glossing over declining sales with a ‘gross margin holding up’ brush. Sean Clarke’s brief will be clear, get your feet under that table quickly and get a plan on the table. There won’t be a honeymoon period for Sean Clarke: it’s a case of get in there and power up the defibrillator.

The decline has been like watching a car crash in slow motion; Aldi and Lidl took Asda’s place as the lowest priced grocer in the UK and ASDA were unable or unwilling to react. By the time they realised a crash was inevitable, it was too late.

The discounters had already convinced price savvy customers that they were not only cheaper but also offer good quality, making their goods excellent value for money.

ASDA must win on price. It is the core value of their business. Price deflation will continue as will further investment in price by all the grocers. The price war is far from over. ASDA will come back fighting on price but price alone will not be enough. The value for money formula has got to be key.

ASDA arguably have the biggest and best clothing business of the four supermarkets, strong non-food and a good core business of grocery and fresh. Stores are efficient and systems strong. But the shopping experience feels soul-less.

ASDA colleagues were the retail giant’s greatest asset. You used to feel a real point of difference from the colleagues in an ASDA store creating a palpable difference, a fun and engaging experience. ASDA invented and brought retail theatre for the masses, but then hit pause and watched others pass them by. The innovation gene was put to sleep and left the retailer just a bit boring.

Absolutely there must be a challenge on price, but bring back the customer experience. Make shopping fun again and give us a reason to choose ASDA.

Tourism, the forgotten realm of retailing.

Postcard from Phil Dorrell, partner, Retail Remedy.

Tourism would do well to follow what retailers have long known: in order to be successful they must follow one overarching simple rule (the number one rule in our retailer’s rules to success as it happens), “Listen to your customer”. Think what they need and then go all out to provide it above all competition. Do that, as complicated as it might be and you will grow a profitable business.

Numerous retailers crash and burn every year as they fail this simple rule. It’s easy to convince yourself that you are delivering great service and that your feedback is good, our customers love us, yet the truth is we find out too late that being on the okay list means you are on the down-slope. If you are not reaching to go beyond customer’s expectations and build on that constantly then you will at some point be overtaken and lose ground and eventually your business.

Tourism is the same but unfortunately the number of attractions, sites, events and local tourism boards who do not get this is rather sad.

In commercial terms it just needs someone to step up to the plate and they will clean up.

For example,  if I was Crantock Beach on Newquay’s south side in Cornwall I’d be going all out to make sure I knew what people wanted. Toilets that worked, showers to wash the sand off a beach user, covered parking, electric car charging points, a decent café with people who understood food service, an improved option for the hire and assistance of Kayaks, Surf-Boards, dog drinking fountains, etc.etc.etc. The list is off the top of my head and based on a short visit asking nobody.

I’d do these things because I know it would make the place THE destination, where I could expect a better return for people staying longer and coming more frequently. I am sure numerous such places have a broad set of stakeholders yet this does not stop High Streets, shopping Malls and European beaches offering an improved service, they know to do so is commercially wise.

It’s not just beaches though, it is virtually every visitor attraction I have visited whilst on holiday in Cornwall. We’ve loved it, yet the truth is as a UK tourist you have to put up with a lot, that in this day and age, is just wrong, and that always means lost revenue and lost advocacy.

Remember, all retail wants is constant footfall, all tourism needs is constant footfall. Drive this with great facilities and make it easy for people to spend time and money in your location. If you do not stand out in a good way then as purses tighten so will your business.

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What Next for Next?

Next reported an uncharacteristic drop in sales in its first quarter and Quarter 2 could be even more disappointing.

What has changed in the last 3 months? Not much. The weather in June was dreadful, the country voted to leave the EU and we are talking ourselves into weakened consumer confidence.

So is there now a case for Next to look inward to its strategy and try a different approach?

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It has been held in high regard as a leader in fashion retailing in the UK and there should be no reason why that opinion should change. Yet, there does feel to be a degree of complacency about Next.

If we were being critical we could suggest that Next are in danger of heading in the same direction as Marks and Spencer. The fashion starts to become a little samey, the website a little uninspiring, and the prices a little short of good value for money when value clothing is forecast to outstrip the rest of the clothing market.

But being generous, the Marks and Spencer customer did head in the direction of Next so its offer was more compelling. Next would do well to now look at that offer and consider where it is positioned in the market and remind customers what it has to offer rather than assuming they are loyal.

There isn’t very much retailers can do about the weather or the Brexit effect so if consumer confidence continues to dip, how can Next counter the effect?

We would suggest that Next looks at the product:price dimensions of its offer and consider how those levers can be pulled to protect sales and hold margin. Considering the forecast growth in value clothing Next might consider a value range for core fashion essentials. Bigger buys and good quality fabrics can deliver the value for money that customers will be looking for.

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Delivery options are a battle ground in grocery and we can see this heating up for fashion too. Next already offer a competitive same day delivery service and click and collect giving Next a point of leverage that few can replicate.

Finally the stores themselves are a competitive advantage if the in store environment can be optimised. Next have some big stores with space that could be used for fashion shows, product launches or collaborations with some of the designer labels they already work with.

Next is not about to crumble, it is a strong retailer that has resisted difficult trading conditions well in the past. There is no reason to suggest that Next are not strong enough to trade through whatever the market has in store for the coming months and years with a little introspection and some creative thought.