Asda boss Sean Clarke has pulled the curtain down on the flagship strategy of his namesake predecessor six months early, with Project Renewal having been quietly wound up.
Sources told The Grocer the last activity under Andy Clarke’s programme of store renovations and range reviews had been wound up in September. Originally intended to run until May this year, the 18-month Renewal had been intended to breathe new life into the struggling giant.
As well as signalling Renewal is no more, Asda, which today reported a 10th consecutive period of like-for-like sales decline, also ruled out a “nuclear” price initiative against its rivals, with the impact of Brexit having been one of the factors at play.
It is understood Sean Clarke, supported by former Sainsbury’s executive Roger Burnley as chief operating officer, has told staff there will be no more publicly set out targets to get closer to the discounters on price as the operator has gone into virtual lockdown to concentrate on getting the basics right in range, pricing, service and quality.
When Clarke took over as Asda boss last July, HSBC analyst Dave McCarthy claimed supermarkets were facing a “Defcon 1 situation”, with Asda poised to unleash an offensive on price that could “wipe out almost all industry profitability”.
But a source told The Grocer after today’s results were announced, showing Asda LFLs were down 2.9% year on year for the fourth quarter to 31 December, that the big onslaught on price was not going to happen.
“It’s pretty clear that we’re not going to be seeing the big onslaught on price that some were predicting.” he explained. “Asda is going to be concentrating on cutting the cloth we’ve got rather than making the cloth bigger.”
Despite Walmart international boss David Cheesewright saying before Clarke’s arrival that Walmart was prepared to sacrifice margin to protect its falling market share, Walmart is no longer likely to use its muscle to try to regain ground from the discounters with an all-out attack.
In fact, sources said the onus at Asda was moving away from just price to value for money, quality and service.
Andy Clarke vowed Asda would be no more than 5% more expensive than the discounters by the end of 2016, a move which some industry experts attacked as an “admission of failure”.
“Its safe to say that while there may be targets in the businesses they are not going to be announced publicly,” said the source. “Sean Clarke is very much of the view that he should not be out there telling our rivals what we are going to be doing.”
A period of introspection
The actions of the new boss have some echoes of those of Tesco CEO Dave Lewis after his arrival in 2014, when it also went into a period of introspection as it focused on improving availability and services, and making prices sharper while holding back from a full-scale price war.
While Asda is not going to “go nuclear”, Clarke has lowered thousands of prices and has claimed to improve the quality of its underperforming own-label range across hundreds of products, backed up by its That’s Better ad campaign.
The supermarket said it was also pleased with the performance of its Extra Special premium products despite the continuing tough time it has over Christmas, which it claimed had been testament to its own-label improvements of late.
Clarke today said he had been “encouraged” by the early signs of customers returning to Asda, claiming 140,000 came back to the retailer in the last quarter despite its continuing fall in sales.
Burnley has been overseeing efforts to improve the quality of service across Asda’s estate, having been said to be spending most of his time since his arrival in March on the front line visiting stores.
In December, Shore Capital analyst Clive Black said he believed Asda was demonstrating “materially higher store standards”, including “cleaner and less cluttered shops” and a much better focus on product availability since Sean Clarke’s arrival.
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