Clarke casts spell on Asda shoppers
ON the first floor of Asda’s Leeds headquarters staff gather around a desk for a spell of ‘forced fun’ known as a ‘huddle’. Speeches recognising the contributions made by employees are delivered, games are played and there are loud whoops and cheering.
It is known as ‘ Asda Magic’, with staff trained to reproduce a version of owner Walmart’s American schmaltz.
A floor below, in the atrium, the quarterly ‘Big Brunch’ is under way – a regular event to mark the firm’s sales figures.
A ‘celebrity’ from X Factor is signing autographs and chief executive Andy Clarke has just delivered a trading update to the grocer’s 2,000 marketeers, buyers and designers.
The company is in a firmer place than most of its rivals. Already this week Tesco has issued its fourth profit warning in the last five months.
Asda, Britain’s second-largest grocer, is the strongest of the Big Four supermarkets - the only one not to have lost market share in the latest Kantar data – having suffered the smallest fall in sales – down 0.2pc over the past 12 weeks.
The grocery sector has been turned on its head as discounters Aldi and Lidl sparked a price war and shopping habits shifted away from large stores to small convenience formats and online.
Last year Clarke was one of the first to react, announcing plans to invest £1bn bringing down prices over three years.
While Asda’s performance shows the strategy is working Clarke says the £1bn figure was just a starting point and will be ‘significantly’ increased next year possibly in the region of another £500m.
‘We said we are going to invest £1bn in price, and we are well into that investment plan,’ he said.
‘That’s still a moving target in that it’s more likely going to be more than that.
‘It is wrong of me at this stage to say what that means but the investment in price is something we are going to continue to stay very focused on if we are going to continue to win share from the other three and narrow the price gap to the discounters.
‘We are fairly confident the direction of travel is the gap getting narrower and we want to keep going.
‘I am forward reading what’s happening in the market.
‘It is going to be coming more price-competitive. The good news is from our perspective is we are ahead of the curve.’
WHEN asked if the a mount to be invested would be substantial he said ‘ most things we do are quite significant’.
He refused to be drawn on whether this would be in the region of £500m, saying: ‘ You could certainty speculate that and we will be happy to declare something next year.’ Price is in Asda’s DNA. With the Big Brunch over staff gather to collect free sandwiches and drinks.
Clarke l eaves the stage and regroups next to an opaque glass door in the atrium which he says is part of a brand new facility. At the touch of a button the glass becomes transparent showing a NASA-style room complete with a bank of screens filling a wall, and technicians positioned in a semi-circle.
It is a state-of-the-art nerve centre to control all of parent Walmart’s 11 websites from the UK – a testament to the integral role Asda plays within the Walmart group.
It will enable Asda and Walmart to monitor all traffic and users on their global websites 24 hours a day seven days a week.
He says: ‘ The new system is expected to enable Asda and Walmart to identify and address any issues with its websites five times faster than before.’
While Clarke built his very own mission control he now appears to be in control of the mission to turn the business around.
‘We have been growing market share which gives us confidence we are on the right track,’ he said. ‘Obviously seeing a negative [sales] number is not a great thing, but we have been consistent and stayed true to our strategy.
‘We are not looking at short term sales. The business continues to do well and amongst the other three [ grocers] we are significantly ahead. Price position is the corner stone of our brand.
‘We are strategically repositioning our brand away from Tesco and Sainsbury’s.’ One tool has been cost- cutting and Asda has shed more than 1,500 management roles recently and it may not stop there.
Two big growth areas have been online and click and collect but Asda doesn’t have smaller convenience formats other than outlets on petrol forecourts.
The other supermarkets charge more for the same products in smaller stores which are open longer hours.
Clarke feels this would jar with Asda’s straightforward philosophy. ‘The big hurdle for us is pricing,’ he said. ‘Why should you pay more for your milk – a 30p gap feels dishonest and not transparent.’
That sense of f air play was ingrained at an early age.
Clarke, the son of a policeman, grew up in Grantham, Lincolnshire. After leaving grammar school with one O-level he worked for his local Fine Fare supermarket, which morphed into Somerfield.
After a ten-year stint with rival Morrison’s he joined Asda. After a spell with Matalan and Iceland Clarke returned to Asda in 2005 as retail director under chief executive Andy Bond.
He replaced him five years later and has now racked up 30 years in the industry.
But over the decades he has never seen the kind of change currently sweeping through the high street.
‘This reminds me of the 1970s,’ he says. ‘When it was all about retail stores. Since then Safeway has gone along with Fine Fare, Lipton and Woolworths. In five years’ time will the players be the same? Who knows? I think there will be continued consolidation.’
The implosion at Asda’s bigger rival Tesco has not been a cause of celebration.
‘I was as shocked as anyone,’ he said. ‘It is not good for the industry. It questions people’s trust. You want strong competitors.
‘But we are a nation of shopkeepers, every week 60m people still go to a supermarket at some point. It is up to us all to rebuild trust if it has been broken.’
Despite the fallout at Tesco he still feels that former chief executive Sir Terry Leahy is one of the UK’s greatest-ever retailers.
With Christmas around the corner Clarke is expecting the battle for shoppers to be as fierce as ever.
‘It will be more competitive than last year,’ he said. ‘Those businesses under pressure will throw everything possible at it including the kitchen sink.
‘Others have halved their profitability, all they want are sales. It will be challenging and competitive.’
Clarke will be drawing on all the Walmart magic he can muster as he tries to conjure a victory from his rivals over the festive period.