george clothing

Asda – The People Have Voted

By Phil Dorrell, Partner, Retail Remedy

If you have a strategy that depends on you being one distinct thing as a USP and you have built your marketing and brand around that, what happens when someone else comes along and does it better?

You could say this is the way that most businesses crash. The High Street is peppered with them, or rather was. Asda are facing that reality now, although there is no way they will crash or even give up, they just need a rethink. More than Tesco and Sainsbury and even Morrisons , Asda hung their hat on being the cheapest, redefined as best value when the discounters first came a calling. Now they have had 3 quarters of declining sales they might want to relook at their USP and start to bring some more unique elements in to the fray, rather than banging on about price all the time.

They were always brilliant at George Clothing and yet it is now gone down-market to Fuddy-Duddy and is not as cool as Primark (shock!) nor as aspirational as F & F (real shock !). In food they retain this aspiration merchandised within each category, in clothing they have separated it to be the place old M & S fashions go to die. Still great value, but not a street crosser.

They used to try and category kill on events too, making them the only place to go for really big events like Easter and Halloween. Now so many retailers have caught up and Asda have just de-costed, taking the feathers off the Golden Goose.

Andy Clarke is right about one thing, the next few years are going to be tough as the market recalibrates. UK Grocery retailing has long had it’s own way, creating industry leading revenues and profits, dominating smaller suppliers, attempting to remove the power of the larger ones and largely fooling the media into the fact that there is some sort of “Price War”. I chuckle every time I hear the words price war, it’s at best been a fist fight; yet now the discounters have arrived they appear at least to be armed and dangerous. Read to take cost out of every part of the operation, thinking cost way before they think of sales, they have a model that works on generating less net profit. The future for the rest of the Grocers is simple, do similar or be prepared to lose even more of the market share. Revenues and profits are likely to be very hard to grow over the next two years for the Big 4, the people have voted and it’s not looking good for them!

If you would like to talk to us about how we can help you re-startegise your business in an increasing market sector, do get in touch.

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