”F***ing bananas” is a phrase that has come to mind quite a lot in the rollercoaster ride experienced by Asda and its suppliers since the takeover by TDR Capital and the Issa brothers.
Yesterday it took on a whole new meaning, however, as Darren Blackhurst delivered a savage verdict on the packaging for Asda’s own-label bananas – picked, one suspects, from a whole bunch of examples of where he realises Asda has been doing things badly wrong.
As an example of how he plans to raise its game, getting rid of the lousy packaging is easy, low-hanging fruit compared with the major reset that will touch virtually every part of the store, announced yesterday at a conference with 600 suppliers in Leeds.
As exclusively revealed by The Grocer last month, Asda summoned sales directors to its Merchandising Centre of Excellence. Speculation that this would see a full-store-wide SKU overhaul of Asda’s offering proved to be spot on.
Asda’s ‘bay by bay’ reset
Blackhurst, in typical colourful style, unveiled plans for a “bay by bay” reset, in an appeal for suppliers to spend more money with Asda, but on the basis that it too would sort out its act.
In fact, fears that this would be a case of Blackhurst dusting off his size 10s to give suppliers a good old-fashioned shoeing proved off the mark. This was more a case of Asda recognising its part in its own downfall, admitting that it will not succeed in getting things right, despite some notable progress in the past year, unless those suppliers are fully involved in the next big phase.
Indeed, Blackhurst told the event he wanted its buyers to spend more time dealing with suppliers rather than looking internally at Asda’s problems.
As experienced suppliers (some of whom remember Blackhurst’s range review of the late 2000s) were expecting, the reset will be based around removals of SKU duplication, with much more focus on key lines and building of partnerships with key suppliers.
With any such process there will be losers as well as winners but, for now at least, many suppliers will welcome Blackhurst’s injection of urgency. Executive chairman Allan Leighton, brought in to salvage the rapidly sinking Asda ship almost a year ago, had already signalled some of what suppliers were told yesterday and made some of the inroads necessary on price, rage and store standards.
Pre-Christmas price cuts
In March, he told The Grocer Asda would be taking the axe to 6,000 SKUs to rid stores of the “slow-selling lines clogging up everything”.
Yesterday the retailer preceded events in Leeds with an announcement it was slashing the price of 956 “everyday” grocery lines, as Leighton aims to win back shoppers ahead of Christmas, with reductions of 6% on average across core lines.
Leighton and Blackhurst have a strong basic argument that a strong and thriving Asda is as good for suppliers as it is good for Asda. They also have a point about the rise of Aldi and Lidl to some extent being based on own label, at the expense of brands.
But suppliers will want to see plenty of evidence that Asda will be raising its game too if they are to pile on board the bus in anything like the way needed for the turnaround to succeed.
Asda insists it has had hugely positive feedback from suppliers about the conference. “Feels like you have the team and belief to deliver the change that’s needed,” was one quote they released from the official comments book. Another said there was “reason to believe again”.
Even taking those with a pinch of Extra Special salt, there is undoubtedly a more optimistic outlook for Asda than during its many points since the takeover, albeit with much more to do.
Asda’s wish list
As one supplier tells The Grocer: “Asda wants to inject some pace and energy into the business. They recognise they had become to slow and cumbersome to deal with.
“But the rest is a wish list. Becoming 10% cheaper than rivals? No chance.”
“It is true that many suppliers have been saying this is what they’ve been waiting to hear for a long time,” says Ged Futter, founder of The Retail Mind.
“Yesterday was a recognition form Blackhurst and Leighton that its not just a case of we need lower prices and everything will be fine. Blackhurst was quite open that in his time back at Asda he’s asked many buyers how many suppliers they’ve seen this week and the answer was none.”
Futter believes Asda has been massively inward-looking.
“It’s Darren’s job to say this is the direction we’re going and then the job of the category directors to make sure that lands,” he says. Blackhurst’s fruity language was not only justified, he adds, but this passion was exactly what suppliers want to hear from Asda, even if at some point soon hard conversations are bound to happen regarding their investment.
“He talks about the pack of bananas covered with labelling saying ‘this banana is sweet and creamy’ and you can hardly see the bananas. Compare that pack to the Tesco pack. The Tesco pack is clear packaging. It doesn’t need to say anything. It’s symptomatic of Asda’s woes and, as Darren said, it’s f****** bananas.”
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