Did the media smell blood? Or was it just silly season, with under-employed hacks going along for the ride? Either way, Asda’s press conference was packed. CEO Andy Clarke looked surprised at the turnout - though not as surprised as the journalists who were expecting him to quit, he quipped. “Here I am presenting the quarterly results, and I’m here to stay,” he promised.
Commentators have deduced that this was a sign of complacency. Even arrogance. Either count is wide of the mark. His ubiquitous media appearances on the day of the worst trading quarter in Asda’s history was about fronting up. He didn’t need to be this conscientious.
The challenge Clarke faced in defending the horrible 4.7% sales decline was a lack of detail. Asda’s press conferences have always been sparse, even in the good times, as Walmart doesn’t break down figures for individual business units. And even if sales aren’t always about vanity, profits definitely represent sanity, yet he could only refer obliquely to the fact that profits were “flat” (profit margins actually increased by 30 bps!).
What we all wanted to know, though, was: what is Clarke doing to address Asda’s terrible top-line performance? Details were thin on the ground, because Clarke doesn’t want to alert the competition. But changes are afoot, with George brand director Fiona Lambert brought in as VP of own-label design and development, for example, and insight from a newly developed survey of 15,000 shoppers informing potential changes to range, quality and service.
Whether these changes will make a difference is another matter. In response to the discounters, Asda has adopted McKinsey’s strategy. Rebasing prices, cutting head office costs, increasing in-store staff. The trouble is… so have his rivals. Everyone is playing the same game. So Asda hasn’t seen any extra footfall. And I still don’t think Asda, the big four, or McKinsey, for that matter, fully grasp why the discounters are so successful right now. It’s not just about price: it’s about simplicity in terms of pricing, range, convenience and even quality. Over to you, Andy.