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.