Asda president Andy Bond is to launch a major new year recovery programme against the complacency and inefficiency that he admits have played a large part in the retailer’s slowdown.
Addressing City analysts this week, Bond said that Asda’s overall strategy was correct but that speed of delivery and implementation had to be ramped up. “The economic engine of this business is not broken but we are in need of a major service,” said Bond.
He will have more cash to play with than ever before to deliver the five-strand recovery programme, which will include Asda’s biggest year of price-cutting activity.
Bond is committed to widening the price gap on his competitors and also plans to create a great fresh food offer, drive differentiation, reinvigorate passion for selling and deliver new formats, including the new Discount Plus format (The Grocer, December 10, p4).
He also delivered a warning that Asda would demand better terms from suppliers, claiming that
Asda’s cost price was still 3% higher than Tesco’s.
He claimed that Sainsbury and Morrisons had succeeded in ploughing into profit margins to claw back the gap in prices this year, but that they would struggle to keep up the same pace of cuts in 2006.
But Bond said that price alone was not good enough and admitted that the supermarket was losing customers because it had lost “shoppability” and personality. “Asda was famous for its customer service but unwittingly we have let that slip and become price focused. There will be a warm, friendly service with no grumpy buggers on the checkout.”
He said another area where Asda had lost its lead was non food and that he planned to increase big brand electrical and white goods, strengthen George clothing and extend it into other areas of non food.
Bond told analysts that Asda was still more then twice as profitable as Sainsbury and Morrisons and that it was the business to watch.
But Shore Capital Retail analyst Clive Black remained sceptical. He said: “I will be waiting to see if Asda can deliver, not just talk.”
Fiona McLelland