>>Jeremy Baker, visiting lecturer in marketing, london metropolitan university, on asda’s matters of the soul
Where is Andy Bond going? At Asda headquarters, a battle is being fought for the soul of the organisation. But there has been a relative silence from the president, aside from his recent digs at suppliers at the IGD conference. One wonders how much is he a servant of Bentonville and how much the supporter of the old Asda identity?
Asda is in a branding vacuum. It could let British consumers know they are shopping in an offshoot of a faraway powerful empire - the kingdom of Wal-Mart. But this demonstration of muscle would come at exactly the wrong time.
Firstly, American values are no longer ‘can do’. A mixture of McDonald’s, Iraq, George W and Katrina brings cause for concern.
At the same time, the UK consumer is searching for uniqueness, localness, people singing Jerusalem at cricket matches and rustics bringing their weird-shaped vegetables to farmers’ markets.
The consumer wants local values, but also the low prices that come from globalisation. In demanding this contradiction, the consumer is behaving as a spoilt teenager who wants rebellion but also security. Sorry, but this can’t be helped. Retail got big by indulging the consumer.
Asda suffered a blow when Tesco recently beat it on price in a Goldman Sachs survey. The core appeal was shattered. The branding vacuum began. Fortunately, Asda has bounced back on price - the Asda identity is shaky but surviving. And the company has made major strategic decisions that can be rated genius: every day low prices; the style of George, not just the low prices; development of non food and high quality, irrespective of low prices.
It was not, however, a genius decision when Asda declined to follow Tesco into smaller food formats, but it must have looked logical at the time. No one could believe the
competition authorities would allow this expansion of the dominant provider into the convenience sector.
The OFT has now said it is considering a fresh look at the grocery market in the UK. I believe that it is locked into a wrong decision that must be reversed at some point. From its viewpoint, it has been following the laws of economics. But, economics cannot measure the power of Tesco Clubcard as uniquely powerful market research. The use of intimate data from the market’s largest group of consumers allows Tesco to distort the whole game. The OFT says Tesco has research data just like anyone else’s. This is like saying BT, with its ‘final mile’, happens to have telephone kit just like anyone else. Sooner or later, the dominant provider’s power must be reversed.
At the more conventional level, the OFT has also ignored the impact of planning permission. It is hard to find sites for new large supermarkets. True, smaller stores have higher costs but, overall, Asda is playing against both Tesco and the umpire, the OFT.
It’s not too strong to say that Asda has been loved in the past. Ordinary people entered as plain C2DEs and were transformed into powerful consumers.
Today, Primark has made a similar jump, from mere shop to the creation of a social revolution.Once, Marks and Spencer made that jump too. Each managed to change the expectations of the whole industry.
Asda is at another crossroads. It must square another circle. For Wal-Mart bosses searching for low prices, the simplest solution is to turn stores into a collection of Wal-Mart branches. The consumer would have to move from ‘warm Asda’ to the ‘scorched earth’ image of Wal-Mart. But, Wal-Mart has not always had major success with its overseas operations. Look at Germany.
Asda values must overcome a series of contradictions. It must be British but American, ordinary but powerful, global but British, efficient but friendly. And it needs strong leadership. Andy Bond has a difficult job ahead but at least there is a heritage of some genius decisions.
Where is Andy Bond going? At Asda headquarters, a battle is being fought for the soul of the organisation. But there has been a relative silence from the president, aside from his recent digs at suppliers at the IGD conference. One wonders how much is he a servant of Bentonville and how much the supporter of the old Asda identity?
Asda is in a branding vacuum. It could let British consumers know they are shopping in an offshoot of a faraway powerful empire - the kingdom of Wal-Mart. But this demonstration of muscle would come at exactly the wrong time.
Firstly, American values are no longer ‘can do’. A mixture of McDonald’s, Iraq, George W and Katrina brings cause for concern.
At the same time, the UK consumer is searching for uniqueness, localness, people singing Jerusalem at cricket matches and rustics bringing their weird-shaped vegetables to farmers’ markets.
The consumer wants local values, but also the low prices that come from globalisation. In demanding this contradiction, the consumer is behaving as a spoilt teenager who wants rebellion but also security. Sorry, but this can’t be helped. Retail got big by indulging the consumer.
Asda suffered a blow when Tesco recently beat it on price in a Goldman Sachs survey. The core appeal was shattered. The branding vacuum began. Fortunately, Asda has bounced back on price - the Asda identity is shaky but surviving. And the company has made major strategic decisions that can be rated genius: every day low prices; the style of George, not just the low prices; development of non food and high quality, irrespective of low prices.
It was not, however, a genius decision when Asda declined to follow Tesco into smaller food formats, but it must have looked logical at the time. No one could believe the
competition authorities would allow this expansion of the dominant provider into the convenience sector.
The OFT has now said it is considering a fresh look at the grocery market in the UK. I believe that it is locked into a wrong decision that must be reversed at some point. From its viewpoint, it has been following the laws of economics. But, economics cannot measure the power of Tesco Clubcard as uniquely powerful market research. The use of intimate data from the market’s largest group of consumers allows Tesco to distort the whole game. The OFT says Tesco has research data just like anyone else’s. This is like saying BT, with its ‘final mile’, happens to have telephone kit just like anyone else. Sooner or later, the dominant provider’s power must be reversed.
At the more conventional level, the OFT has also ignored the impact of planning permission. It is hard to find sites for new large supermarkets. True, smaller stores have higher costs but, overall, Asda is playing against both Tesco and the umpire, the OFT.
It’s not too strong to say that Asda has been loved in the past. Ordinary people entered as plain C2DEs and were transformed into powerful consumers.
Today, Primark has made a similar jump, from mere shop to the creation of a social revolution.Once, Marks and Spencer made that jump too. Each managed to change the expectations of the whole industry.
Asda is at another crossroads. It must square another circle. For Wal-Mart bosses searching for low prices, the simplest solution is to turn stores into a collection of Wal-Mart branches. The consumer would have to move from ‘warm Asda’ to the ‘scorched earth’ image of Wal-Mart. But, Wal-Mart has not always had major success with its overseas operations. Look at Germany.
Asda values must overcome a series of contradictions. It must be British but American, ordinary but powerful, global but British, efficient but friendly. And it needs strong leadership. Andy Bond has a difficult job ahead but at least there is a heritage of some genius decisions.
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