Asda and Morrisons need to “go back home to the wife”

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A senior director at one of the big four supermarkets recently told Blackfriar that grocers ignore their big supermarket estate at their peril.

He likened it to going to a nightclub and flirting with all the pretty girls, but “you still go home to the wife at the end of the night”.

In this case the wife is the core estate of large supermarkets - which still make up the large majority of profits - and the pretty girls are new areas such as online, convenience stores and click and collect.

The new areas are showing massive sales growth, but whether they are profitable is a questionable matter.

It appears that Yorkshire’s two supermarket giants are taking this advice on board.

This week Leeds-based Asda put on hold plans to open stores in London and Bradford-based Morrisons recently sold off its convenience chain.

Asda is scrapping investment in London in order to focus on its core superstores in a bid to win back customers who have jumped ship to discounters Aldi and Lidl.

Morrisons to ditch Match and More for simpler loyalty scheme

Asda, the UK’s second biggest grocer after Tesco, announced plans to revamp 95 larger stores across the country which make up about a third of its big store estate.

The revamp will range from face-lifts to a full remodelling and each store will be given a tailored redesign.

Asda, now owned by US retail giant Wal-Mart, will also ditch plans to create 1,000 click and collect sites by 2018 and it will halt the expansion of the service into London Underground stations.

The moves follow Asda’s worst ever quarterly sales performance when underlying sales fell 4.7 per cent in the 11 weeks to June 30.

Interestingly, the changes will go under the banner of Project Renewal. The name was first used by former boss Archie Norman when he resurrected Asda in the early 1990s.

A spokeswoman said that current CEO Andy Clarke played a big role in that revamp so the name seemed suitable.

“We are harking back to our heritage,” she said.

The big four grocers are all battling to stem the flow of shoppers to Aldi and Lidl, which are stealing thousands of customers every week by offering lower prices and fewer frills.

Kantar Retail analyst Bryan Roberts said: “You need to look after the core business, particularly when the competition is so intense. Sharpening prices and rejuvenating the main part of your business certainly seems sensible at the moment.”

Dan Murphy at management consultancy Kurt Salmon told Retail Week: “Supermarkets have got to continue down the online route because they have educated customers that that’s the way the market is going, but they have all realised it’s not profitable.

“All the supermarkets have got to do something about making this profitable and that’s what they are struggling with. Click and collect is seen as an important part of the answer.

“Andy Clarke is probably worried about how much money this is costing. He’s probably had a few heated phone calls from Wal-Mart is Bentonville suggesting that Asda stops experimenting and fixes its stores.”

The latest data from ​Kantar Worldpanel​ will not make happy reading for Mr Clarke. Asda ​is lagging behind its peers with sales falling nearly twice as fast as arch rival Tesco.

Meanwhile Aldi and Lidl both enjoyed growth of over 17 per cent.

​Fraser McKevitt, Kantar Worldpanel’s head of retail and consumer insight, said: “With convenience, you have to get it right. Morrisons got it wrong. Asda is quite canny. They are saying: ‘We will invest in what we know’.”

It’s all well and good flirting with shiny, bright new ideas, but as Sir Ken Morrison always said if they don’t make a profit, then don’t bother with them.

It’s time for the big four to go back home to the wife and focus on their traditional superstores.