It’s unlikely too many supermarket execs will spend their bank holiday weekend on a Lambretta heading to the Isle of Wight festival. But Barry Williams, with his Paul Weller hair, passion for parkas and love of live music, will be driving there in convoy with friends “like something out of Quadrophenia”.
It will take them six hours. “We’ll be knackered by the time we get there,” he laughs.
Before then, though, he’s taking care of business. Williams is chief merchandising officer for food at Asda , and he’s on a mission to lower prices. Eleven wins in the last 11 weeks of The Grocer 33 suggest he’s hitting his KPIs. So how does Asda keep beating supermarket rivals on price? What’s he doing about Aldi ? How does he plan to evolve the Asda Price Guarantee, now the competition has ripped it off? And what part do suppliers play in the masterplan?
First up, price. Williams says a “brutally efficient organisation” and a “healthy paranoia” keep prices down. “Asda is a well-oiled machine where everyday low cost (EDLC) equals everyday low prices. It’s a mantra that’s ingrained in the organisation. It’s why we get up in the morning.”
He’s also focused on “consistent” pricing and avoiding “confusing” promotions. He’s got this week’s ads from rivals pinned to the walls of his office.
“Look at the bouncing around of pricing, the amount of noise. Take the Morrisons ad for Sizzling Bank Holiday. Half price here, 25% off, multibuys, a percentage free, save a third. All on the same communication!”
As for holding prices down, Williams says the best example at Asda is milk , which has been at a “symbolic” £1 for four pints for over a year, while chief rival Tesco has risen to £1.39.
My taxi driver said he shops in Asda because of the price of the white stuff, I say.
“Music to my ears,” grins Williams. “These are the things that stick in the mind, the basic requirements. Our customers know it isn’t low today, up tomorrow, down again on Friday. I’d hate to do this role at Tesco and explain to a customer listening group why Tesco charge £1.39 for four pints when Asda charges £1.”
Given the gulf in difference between the two, is it ever tempting to nudge it up but retain a healthy gap?
“Absolutely not,” he says. “A lot of businesses talk about putting the customer at the heart of everything, but we mean it. We protect them, they reward us with loyalty. Customers are so frustrated by fluctuating prices.”
Williams also has no sympathy for Tesco’s much reported fine for selling ‘half-price’ strawberries. Tesco’s apology claimed it offers so many products, it couldn’t keep track. Doesn’t Asda face similar issues?
“It’s a complicated business,” he shrugs. “We have huge supply chains and massive ranges. But our job is to make it simple for customers. If we put things in front of customers that are complicated, we deserve what we get. Is your intention to build trust with customers through stable, honest pricing? Or are you trying to create artificial excitement in stores to sell more?
“It’s understandable why some of our competitors choose to inflate prices, move them around, then get prosecuted for it. It’s to distract the customer from where the real value is. You’ll never walk into one of our stores and see buy one get one free, half price this or that. It’s about round pounds. It’s dead simple. It’s about the product and the price.”
Snapshot
Age :43
Status : Married to Jude, five children aged 18, 16, 9, 8 and 5. It’s a good spread, it keeps me on my toes.
Career background: I was at Kwik Save for 10 years, the Co-operative food group for four years, then Musgrave for five years. I joined Asda in 2008. Always been in food retail, always the commercial side of the business.
Career high: I’d have to say that is still to come. And I’d give you the same answer for a career low.
Favourite meal: Italian - any pasta.
Idea of a good night out: That would be a night out with Jude. Otherwise, definitely out with mates, go and see some live music then back to my local.
Favourite album: Away From the Grain by The Stone Foundation. It’s a great album.
Favourite TV show: I don’t really watch TV. Apart from sport.
Hobbies : I’ve got a plucky greyhound… called Rollback
Price guarantees
Hovering in between is the APG, which launched in 2010 and has spawned numerous imitations. Isn’t this a gimmick?
“No, it’s not a gimmick,” says Williams. “It was the pioneer and it’s the only one where customers can see prices compared to other retailers . The others compare brands, or not brands, or you need to be accompanied by both parents before you get a voucher. APG is the only transparent one.”
Asda has “loads of great plans for APG”, which Williams is keeping under wraps, for now, because of concerns rivals will pinch them. Surely instant vouchers at the till is next, I say. The eyebrows go up, but the lips remain sealed. “You need to talk to Steve Smith (Asda’s chief marketing officer) about the plans he has for APG,” he deadpans. “My role is to lower prices so rivals print bigger vouchers.”
He’s succeeding - but what’s he doing about the discount monster Aldi?
“Aldi is absolutely growing. You have to sit up, look at them and understand them. But it’s what we do in this building that really counts. We play to our strengths.”
When it comes to Asda vs Aldi, those strengths are about range and value, rather than price, he says. On the “core products in most baskets” Asda is a match for anyone, but he emphasises that Asda is a “large-scale, broad assortment” business, where shoppers can buy “everything under one roof”. That makes it a “completely different proposition” to a “small store with 1,300 lines and little brand participation.”
True, but Asda’s Q2 0.7%, like-for-like sales bump looks weak next to Aldi’s 29.8% growth. If he’s doing such a great job, why isn’t Asda growing faster?
Williams is quick to draw the bigger picture. Asda’s like-for-likes over recent quarters show a “steady, solid increase”, and “positive 0.7% in this market is a good thing. Look at the investment we are making in prices and the quoted numbers in terms of retail price inflation. If we hadn’t invested in those prices and sat on 5% food inflation, we’d have a 5% like for like.”
Maybe, but without that investment wouldn’t Asda risk shoppers going somewhere cheaper? Like Aldi, for example? Possibly, but betting on volume will pay out in the long term, he believes. “There aren’t many retailers of our scale in volume growth. We may operate on lower returns than others because of the volume going through our stores, but volume lowers costs. That means we can invest more in price. It’s a balancing act. We can’t go too far one way or the other, but we feel, given the marketplace and the economic indicators we see, we are getting that balance right.
“We are not kneejerking around to buy short-term performance, or market share, so we can stand up in front of the City and say, ‘look at us, aren’t we looking great?’ That doesn’t help in terms of building trust with customers.”
“A lot of businesses talk about putting the customer at the heart of everything, but we mean it”
Horsegate controversy
That trust was in danger of being eroded earlier this year when Horsegate hit the headlines. The memories are clearly still fresh with Williams, who says it was “huge”.
“It shocked me. It shocked the whole industry. We’ve won the Grocer 33 award 16 years in a row, we’ve won favourite supermarket for three years on the trot, we won a Grocer Gold award for products like fish Made Simple, and it’s all fabulous because we take a lot of pride in our products. So for something like Horsegate to happen was a shock. We absolutely believe we compete on price but never at the expense of the products we put in front of our customers. When you step back now and look at what happened, rebuilding trust with the customer is the most important thing.”
Williams insists that customers won’t end up footing the bill for the money it will take for Asda to ensure it doesn’t happen again. “the customer cannot bear the cost of that. Whatever we put in place we have to do with an EDLC head on and make sure it doesn’t affect them.”
He also says retailers bonded during Horsegate after a forum was created to discuss the situation and share knowledge so they could tackle it. Not that the new-found friendliness lasted very long.
“It brought us closer. Now, not really. But in a way it has strengthened our relationships with our suppliers. We were always close, now we are closer. The way we invest in agriculture, our relationship with farmers and growers, has become more important. Horsemeat forced us to look at the way we work together.”
Suppliers
Williams is also happy to see the arrival of the Groceries Code Adjudicator, but he’s emphatic it won’t make any difference to the way Asda does business. The closeness Asda has with its suppliers means they will let him know if Asda is out of line, he says.
And there aren’t any more contracts with suppliers than there were before, but where there are, they are “clearer”. He’s equally clear there is a two-way relationship going on.
“We have to trust them and they have to trust us. A quality relationship is paramount. We work just as hard on that relationship as we do on our relationship with customers, because suppliers play an unbelievably important role in it all. If you work closely with suppliers, you get a lot further, a lot quicker. Act with integrity. Do what you say you’re going to do.”
That steady attitude extends to overall retailing. During his career he’s learned a number of “valuable lessons”, but everything boils down to the basics.
“Retailers need customers. Customers want great products and great prices. Get that right and everything else starts to flow,” he says.
And with that Williams is off. He has a couple of other meetings to attend to before the bank holiday weekend starts, and he needs to get going. One of his friends, “a lawyer in the City”, called him last night. He needs a hand to fix his Vespa.
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