Asda – Some Quality Decisions Needed

By Phil Dorrell

The woes of Asda have been well documented by countless newspaper columns and down beat interviews. After 11 consecutive quarters of sales decline the time has come for a response that moves away from what it has always done; after all the definition of madness is doing what you’ve always done and expecting a different result.


Chasing the drifting spend by reducing prices further and continuing to reduce costs is frankly silly, yet the paymasters at Wal-Mart will want costs decreasing ahead of sales. With margin and operating profit apparently declining too, it all adds up to a bit of a pickle. The price perception brought about by the discounters is only going to lead Asda further down the wrong path.

As a store manager, competing against Asda in the 90’s was hard as they had a great non-food range, a burgeoning George range and an increased presence of aspirational food, something that Safeway prided themselves on. Now most of this has been washed away.

Asda’s food range is frankly cheap. It might be cheerful but it lacks excitement and is definitely unable to satisfy Sainsbury or Tesco customers. The George range that started off with Next type quality has been cost engineered down to the sort of product nobody is going to be proud to wear, and certainly not show the label. The non-food range is choker with cheap product and the seasonal aisle smacks of lazy buying trips to China. Where is the ambition? Where is the product to recapture the customers who migrated to Aldi for price and stayed because their quality was better?

I am an ex Asda colleague and want them to be better, but this just makes me, and countless others, frustrated that their myopic focus on price and cost will ultimately turn them into a poor man’s Wal-Mart. Asda need a comprehensive range review in every major category to identify where the quality at a great price product comes in. Opening price points should not be sacrificed but aspirational product needs sourcing to win back a consumer who is feeling a little, but only a little, better off than they did 5 years ago.

The other factor in all of this is regional ranging, and I don’t mean the local lamb or the farm cheese but a more discerning look at the product ranges aligned to the demographic mosaic of the area. If in a wealthy area of Wakefield I cannot buy a real French stick on a Friday then Sainsbury here I come.

M&S playing catch up on online grocery delivery

It feels odd to say it in 2017, but one of the UK’s most well-known food retailers are only now announcing a move into online grocery delivery.

M&S have announced their intention to trial online grocery deliveries within certain postcodes. Although the mechanics are still being decided, Ocado have been named as a possible partner for the trial.

Morrisons already partner with Ocado for online grocery and with the expertise of Ocado and the strategic turnaround of Morrisons, the relationship appears to be flourishing. The model operates out of Dordon customer fulfilment centre but is expanding into store picking using technology developed with Ocado.

Different customer, different model

The M&S model will probably look a little different, primarily because the range is much narrower than that of Morrisons, and the basket size smaller. Nor is the customer shopping mission comparable, with M&S catering more to the convenience, meal for tonight, market compared to Morrisons family shop mission.

If the Ocado deal goes ahead there will be a couple of options: will M&S list its range on the Ocado website, like Waitrose, or will Ocado assist M&S in fulfilling its own orders? The later seems more likely but with smaller orders the economics would be challenging. Scale is imperative: more orders, more picks, more journeys, equals higher costs.

Smart move

Ocado launched Smart Pass, like Amazon Prime, where customers pay a subscription rather than for each delivery. This has resulted in more transactions but smaller basket sizes for Ocado, shopping more often and completely aligned with the convenience supermarket shopping mission. M&S would fit that model very well, loyal customers shopping frequently but with smaller basket sizes.

Playing catch up has its advantages

Amazon reportedly took a punt on Prime, more on gut feel than substantiating data. Ocado may have made a similar decision. But by the time M&S launch, Ocado will have data to support a decision and this knowledge will be attractive to M&S. Sometimes playing catch has its advantages.

The timing of M&S online grocery shopping while late, has the advantage of learning from other grocer’s business models and Ocado’s now profitable operation. M&S will understand the pitfalls to avoid and the points of advantage to seek out. Expect small incremental steps rather than giant leaps.