Asda CEO Andy Clarke called the supermarket’s 4.7% Q2 like-for-like sales plunge a “nadir” last week. Forced to deny the grim results would herald his sacking (“I’m here to stay!”), he blamed “unprecedented” turmoil in the grocery market and predicted an “upward trend” for Asda in Q3.
While he’s waiting to see if the “green shoots” he says have appeared take hold, the results of the first Kantar Retail UK PoweRanking report will give him a much-needed lift.
Asda has topped the poll, and Clarke can feel entitled to view the result as a comprehensive endorsement of Asda’s all-round performance by suppliers up and down the UK.
Feedback came from 160 respondents at 62 suppliers, who were questioned by Kantar Retail on a range of criteria, from clarity of company strategy to digital capability. And once the numbers were crunched, Asda emerged top of the class.
So how did it do it? Who else among the big four performed well and who did poorly? How did the discounters get on? And what do suppliers predict the future holds for the UK’s biggest, and arguably most troubled supermarket of all, Tesco?
This year is the first time Kantar Retail has released its PoweRanking report for the UK.
“We are delighted to bring this trusted study, now in its 20th year in the US, and its fourth year in China, to the UK and we hope to make this a respected benchmark for the industry,” says Kantar Retail principal consultant Tara Benjamin.
The objective of the report is clear: to identify the UK’s best grocery retailers, provide insight into why they are considered the best, and highlight areas of improvement. “The results help retailers understand their strategic and operational strengths as they are ranked by their trading partners, which highlights areas of focus for future development,” adds Benjamin.
“Asda hasn’t changed its strategy in all the time I have worked in fmcg,” said one supplier. “It’s clear and it works.” Another supplier said its “simple value-based” strategy was “easy to understand and well-communicated”.The PoweRanking report achieves this by breaking down the relationship into certain key criteria, starting off by asking which retailer has the clearest company strategy. And Asda finished ahead of Aldi.
Aldi also came in for praise. “Aldi’s very simple and clear proposition is reflected in its execution,” said one supplier. “They have clear pricing and clear store layouts - every single store is almost identical to the others”. Another described the discounter’s strategy as “ruthlessly clear, and it doesn’t change every six months. You know where you stand”.
Asda also scored well for in-store branding, finishing third, although Waitrose topped the table. “You are never going to be in a Waitrose looking for best price and value, but instead the focus is on the experience, how it looks and on the Waitrose brand,” said one impressed supplier. Sainsbury’s finished second, coming in for praise for its consistent approach and the way its stores reflect its “above-the-line marketing”. Their fixtures were also clear, “without too much PoS”.
One of the most interesting insights to emerge from the report is how suppliers reacted when asked who they believed would be the power retailers in grocery in the next five years.
Despite the hyperbolic coverage dedicated to Amazon’s imminent arrival in grocery proper, only 15% of suppliers predict Amazon will be a power player in grocery between now and 2020.
And what of Tesco? While Asda has been under pressure in recent months, it is as nothing to the three-year-long fall from grace of Tesco, culminating earlier in the year in it recording the worst results in its long history, and announcing the mothballing of several stores, mass job layoffs and a clearout of the board.
Is the patient mortally wounded? Suppliers think not. Asked by Kantar Retail who they expected would become the ‘power retailer’ over the next five years, 74% of manufacturers picked Tesco, the most unanimous endorsement in all the categories and a firm indication that, in the eyes of suppliers at least, Tesco’s scale, brand equity and market share will see it play a significant part in the future of the trade.
“Tesco is still the dominant UK grocery supermarket, even at a ‘low’ for them,” said one supplier. “They will not quietly fade away.”
Another tipped Tesco to “recover their mojo” and said the supermarket had “the formats in place to meet all shopping missions and needs”.
As much as Tesco is “struggling”, its “concepts and offerings are still relevant” and it still has the “footprint, the equity and the desire to turn it around,” another supplier added.
Suppliers also commended the new management team under CEO Dave Lewis, who is due to celebrate one year at the helm in September.
“Tesco has aired their baggage and the bad news,” said a supplier. “Now they will use the next five to 10 years to evolve the offer and become great again. I have no doubt the new leadership team will be able to do this”.
Asda also scored highly on this count, with 57% of suppliers predicting it will be a power player over the next few years.
Neither Tesco nor Asda can be complacent, however, because suppliers are in no doubt that the discounters will grow in power, picking Aldi as number three in their ranking of future power players. Some 47% of them predict Aldi, which currently has 5.6% market share compared with Tesco’s 28.5% and Asda’s 16.4% according to Kantar Worldpanel, will become increasingly powerful in years to come.
In fact there is cheer for the discounters throughout the report, and for Aldi in particular, which finished fifth in the overall table (Lidl was seventh). “Both are one step ahead of their market share positions,” says Benjamin. Lidl was also voted fifth for clearest strategy and best branding.
Business and pleasure
With supplier negotiations in the spotlight like never before following Tesco’s profits overstatement, it was Asda and Sainsbury’s that suppliers said were the best supermarket to do business with. And they also came out top in terms of category management and buying teams, due their knowledge, focus on collaboration and intelligent approach.
“The people at Asda know their business, do what they say, and are fair, open and honest,” said one supplier. And Sainsbury’s adopts a “shopper-based approach and has sensible conversations about why a range is right for shoppers, and quality of products,” said another.
Sainsbury’s also scored highly for innovative merchandising and supply chain management, though it was bested in both categories by Tesco.
Suppliers praised Tesco’s “radical” adoption of mission-based layouts and considered its Euphorium Bakery concept on a par with foodie favourite Whole Foods Market. As for its supply chain, suppliers said Tesco was the only supermarket “resourced correctly” and that it was comfortably the most “sophisticated” of the supermarkets.
Sainsbury’s and Tesco also took the top two spots in the last two categories, which looked at category leadership and digital activity.
Sainsbury’s was described as “best in class” when it came to category management and was “rigorously shopper focused”, while Tesco’s long-running Clubcard scheme was praised as the “richest data source” in grocery.
Yet while Sainsbury’s willingness to try new things in the digital arena was praised by suppliers, Tesco “leads the way” as it has done since it became the first major multiple to launch an online grocery service.
Conspicuous by its absence from the top of any tables is Morrisons, which fired CEO Dalton Philips at the start of the year. Worryingly for new CEO David Potts, it failed to register on either the ‘clear company strategy’ or ‘power retailer in five years’ tables.
Its best placing was an underwhelming fifth for best supermarket to do business with, best buying and category management, and innovative merchandising. It finished sixth in the overall table.
So, ultimately, the best supermarket in the country, according to suppliers, is Asda, a fact that will bring some cheer to Andy Clarke as he chases a better Q3.
“Despite the disappointing Q2 figures, manufacturers still think highly of Asda,” says Benjamin. “Manufacturers ranked Asda number one for having the clearest company strategy and the best buying teams - two critical capabilities needed to navigate a steady course through the choppy UK waters.”
Sainsbury’s comes a creditable second, after a consistent showing that reflected well on the way the supermarket handles itself. Given recent history, Tesco may be relieved to finish third. We’ll have to wait until next year to see if it stays there.
Suppliers praised the predictability of Asda’s strategy. “Asda hasn’t changed its strategy in all the time I have worked in FMCG,” said one. “It’s clear and it works”. Another said its “simple value based” strategy is “easy to understand and well communicated”
Which retailers have the clearest company strategy?
Aldi finished just behind Asda. “Aldi’s very simple and clear proposition is reflected in its execution,” said one supplier. “They have clear pricing and clear store layouts - every single store is almost identical to the others”. Another described the discounter’s strategy as “ruthlessly clear, and it doesn’t change every 6 months. You know where you stand”.
Which retailers have done the best job of branding their stores to their shoppers?
“You are never going to be in a Waitrose looking for best price and value, but instead the focus is on the experience, how it looks and a focus on the Waitrose brand,” said one impressed supplier, while another said the “consistent” in-store experience at Waitrose “totally matches their brand and shopper expectation. It’s clear what the Waitrose brand stands for and whom their target shopper profile is.”
Sainsbury’s also came in for praise for their consistent approach and the way their stores reflect their “above the line marketing”. Their fixtures were also clear, “without too much POS”.
Which retailers do you project to be the “power retailers” in the next 5 years?
“Still the dominant UK grocery supermarket, even at a ‘low’ for them,” said one supplier. “They will not quietly fade away.” Another agreed, saying as much as Tesco is “struggling” their “concepts and offerings are still relevant”. Although said they still have the “footprint, the equity and the desire to turn it around”.
Suppliers also commended the new management team under CEO Dave Lewis. “Tesco has aired their baggage and the bad news,” said a supplier. “Now they will use the next 5-10 years to evolve and become great again. I have no doubt the new leadership team will be able to do this”. Another tipped Tesco to “recover their mojo” and said the supermarket had “the formats in place to meet all shopping missions and needs”.
Which are the best retailers to do business with?
Sainsbury’s topped the poll for its “collaborative” approach to building “better relationships” said one supplier, who also liked Sainsbury’s “professional approach to business, combining toughness in negotiation with creativity and pragmatism”. Dealings with the supermarket are “straightforward, non-aggressive and they follow through on what they say,” said another.
Asda also scored highly. “Asda has great joint business planning,” said a supplier, while another said Asda was “the most collaborative”, “prepared to try new things” and “evolve their retail strategies”.
Which retailers have the best category management/buying teams?
“The people at Asda know their business, do what they say, and are fair, open and honest,” said one supplier. “They actively share data,” said another, while a third said Asda works “hard in all commercial areas to maximise opportunities and work hard toward excellence in-store execution.”
Sainsbury’s buyers were also deemed “measured and objective” and they “put the needs of the consumer above their own personal needs and taste,” said one supplier. “They take a shopper based approach and haves sensible conversations about why range is right for shopper, and quality of products,” another. “They look beyond unit ROS to what actually drives value”.
Tesco’s mission based approach was described as “radical” by one supplier, while another said Tesco’s Euphorium Bakery concept was “on a par with Wholefoods”. “Tesco show innovation by cross merchandising relevant items together no matter the category,” said a third. “Other retailers do this too yes but they just seem to do it better”.
Which retailers practice the most innovative merchandising approach?
Sainsbury’s was also applauded for taking an “innovative” and “full category approach” that resisted being “led by the bigger manufacturers”. Like Tesco, suppliers liked its trials of “mission and zone led layouts” and that they “actively seek input from category partners and keep trying new things”.
“Tesco are resourced correctly in this area unlike other retailers,” said one supplier, while another described Tesco’s supply chain systems as “the most sophisticated” in grocery retail. “They are the only retailer that I’ve never had to dig into a supply chain problem and fix something,” they added.
Which retailers practice the best supply chain management?
Sainsbury’s systems were also described as “easy to use” as well providing accurate pre-forecasting”. “Sainsbury’s on shelf availability is the best I have experienced,” said another supplier. “They really focus on the end goal and take it very seriously”
“Sainsbury’s total store projects are absolutely best in class retailer category management,” said one supplier. Another said it had a “clear trading strategy that cascades to the category strategy. It is aligned to the merchandising and promotional strategy” while a third said Sainsbury’s was “rigorously shopper focused” and “value the importance of category thinking”.
Which retailers practice the best category leadership?
Tesco’s Clubcard scheme was also highlighted as offering suppliers the “richest data source” that allowed for “deep analysis to enable greater understanding of the category and customers buying into the categories”. And one supplier also approved of Tesco’s reduction in SKUs, saying although the situation is “painful” it is the “right approach to provide the best shopper proposition and mid-term get their vote by offering better choice than Discounters whilst removing SKU complexity”.
Which retailers are making the best use of digital, mobile and social networking platforms in their joint planning with you?
Suppliers were impressed at how Tesco has integrated digital into shopper marketing and for its “clear plans” in the digital area. Ultimately it “leads the others in this area, though they also are still learning,” said one supplier. “And they have a variety of tools to activate using these channels, like Dunnhumby and Social media.”
Sainsbury’s was also praised for its “good collaborative approach” and “willingness to try to activate shopper principles through online platforms, taking the right approach for how to communicate to shoppers and how effectively inspire shoppers to online purchase.”