Can Roger Burnley put Asda on the front foot again?

We’ve grown accustomed to departures at Asda. If the latest two have come as a surprise, however, that says more about the style of outgoing CEO Sean Clarke than it does about the news itself.

Clarke was no friend of the media - to the point of rudeness - insisting on an almost total media lockdown, even when the news was good. But it’s been well-known internally - and was also flagged at the time of his appointment - that Walmart lifer Clarke had been brought in like a sharp-elbowed management consultant, to stabilise the business before handing over the reins to chief operating officer Roger Burnley.

At the time, that promise might have seemed open to doubt, since international boss Dave Cheesewright had needed to inform Burnley, embarrassingly, that he was not Andy Clarke’s heir apparent, as the then-CEO had claimed, before humiliatingly dumping Clarke and appointing namesake Sean.

But it’s been increasingly clear that not only was Sean Clarke steadying the ship; Burnley was indeed making himself more than useful.

Similarly it’s been known for some time that chief merchandising officer Andrew Moore, who suffered a serious heart attack two years ago, was planning to retire. Why Asda chose not to announce to the media his retirement - or the appointment of Carrefour Spain hypermarkets boss Jesús Lorente as his replacement - is something only Clarke will be able to explain, as the news was only allowed to dribble out via Lorente’s LinkedIn profile.

So what is the legacy of the short-lived Sean Clarke era and what is on Burnley’s to-do list?

Easy

Early in his tenure, in a one-off attempt to court the media via an off-the-record dinner with senior retail journalists, Clarke promised that turning round Asda, which had suffered a sixth consecutive quarter of negative like-for-likes, was going to be easy. The journalists were shocked at his confidence, though Clarke himself refused to provide any insight as to how he might achieve this easy turnaround.

As four more like-for-like sales drops followed - with Project Renewal scrapped and payouts handed back to suppliers following a Grocery Code Adjudicator probe - it’s not perhaps been quite as easy as Clarke imagined.

But in recent months there have been chinks of light visible under Clarke’s firmly shut door. And even if its return to growth for the first time since 2014 in August, with sales up 1.8% in its second quarter, is flattered by inflation, and lower than its big four rivals too, there is no denying Clarke has achieved success on his own terms.

Resisting strong calls (or predictions) from some analysts that he would launch a nuclear price war to challenge the discounters once and for all, Clarke has made Asda more competitive. A sharpening of Asda’s pricing has been particularly evident in recent weeks, as it pulled away from its big four rivals in the Grocer 33.

Some analysts question whether Clarke, who is said to be taking time off before returning to an as-yet unnamed role in Walmart, is paying the price for failing to turn around Asda’s fortunes quickly enough.

“We would have expected that had results truly turned a corner, Clarke would be continuing to run this business through 2018,” says Tom Berry, food and grocery analyst at GlobalData. “The fact is Morrisons (+2.6%), Tesco and Sainsbury’s (both +2.3%) all posted significantly better results, with inflation the main driver behind Asda’s growth.”

The consensus within Walmart, however, is that he’s done what he needed to do, and the time was right for Burnley - never previously a CEO - to step up. “Sean is a good guy,” adds one former Asda executive. “He’s brought the right focus to Asda and it was a really big ask, but I’ve also heard he was a very blunt instrument. Roger is far more culturally aligned with Asda and looks like the right man moving forward.”

Holes beneath the waterline

It has been Burnley who has been finding out where the holes are beneath the waterline. He has visited stores across the country and there is already evidence of his road miles paying off. Improvements such as new computer systems to address woeful availability and the reintroduction of fresh food produce managers - in stark contrast to the cutting of resources at HQ level - are two examples.

Asda has also put a renewed emphasis on “fast but friendly” service, while reintroducing its mystery shopper programme early this year.

Internally and externally, no-one is in any doubt, however, of the task still facing Burnley.

“Burnley faces an uphill battle,” says Berry, “with the discounters expanding at pace, premiumising their ranges and developing consumer trust in their own-brand offers. Asda must first revamp its stores to meet the improved expectations of shoppers following increased investments from the others. It must then distinguish itself from those competitors.”

The task of improving Asda’s selection - at one point its supplier relations in Europe were so poor it joined a European buying group - has fallen to Jesús Lorente. An expert in supply chain and logistics, he’s been at Carrefour Spain for eight years, most recently as chief merchandising officer.

Sources say there were clear reasons behind Lorente’s appointment. He has a strong track record in handling hypermarkets, which should suit Asda’s store estate, and has experience in fresh food and taking on Spain’s discounters.

Like rival boss Dave Lewis at Tesco, Lorente is also a former Unilever veteran, for whom he worked for 18 years in the UK, and in Spain and the US.

However, some see this as another bewildering appointment. “My understanding is Lorente is very much into short-term relationships, not long-term strategy,” says another former Asda executive.

And between them Burnley and Lorente have a huge repair job to do with Asda’s suppliers.

That damning report by GCA Christine Tacon in September 2017 into Asda’s Project Renewal told how some suppliers were asked to hand over as much as 25% of their annual turnover for SKUs, or face being delisted in “a clear breach of the Code” as Asda attempted to get closer to Aldi and Lidl on price while maintaining profitability. The Adjudicator also revealed suppliers were given as little as 24 hours, or in one case “overnight”, to agree to its demands.

It was Clarke’s job in September 2016 to abandon Project Renewal, and he co-operated fully with the Adjudicator’s probe, not only in paying back suppliers but giving Tacon access to emails - co-operation crucial in ensuring Asda didn’t face a proper investigation or potentially hefty fine. But suppliers have long memories, as Tesco has found.

Morale

There is also a repair job to do in terms of morale at Asda, which following a series of savage head office cutbacks was described by one former executive recently as “rock bottom”.

In September, The Grocer revealed more than 300 Asda HQ staff were to be made redundant in a new wave of cutbacks, the third major round of job cuts at Asda House in as many years, on top of a consultation involving more than 3,000 store staff.

Of course, Asda is not the only retailer to have carried out huge HQ job cuts, but critics point out the way the changes have been made are typical of the approach Burnley needs to overhaul.

“The axe was swung in a way that indicates departments had to make a percentage cut,” says a former executive. “People have gone you wouldn’t have expected, buyers with 10 to 15 years’ experience.

“It was purely a cost-cutting exercise, it’s not been a well planned, well thought-out piece of change. Instead it’s just the axe thrown to prop up profit.”

Too often in its trouble of late, that is exactly the message Asda has allowed to come across.

Now, after the era of a boss who, despite making changes for the better, became known as Mr Invisible, Burnley has a chance to put his stamp on the business and to show Asda actually cares about colleagues and customers rather than just the bottom line. A little respect for the media - and appreciation for what we do and can do - wouldn’t go amiss, either.