Asda has appointed its first Yorkshire CEO in over 30 years and he faces some tough times ahead.
Dewsbury-born Roger Burnley will take over the reins on January 1 amid a consumer downturn and huge political uncertainty.
Mr Burnley describes himself as a “born and bred Yorkshireman”, but he will need to fight his corner against US parent company Walmart which has treated its Leeds-based company like a cash cow.
Once the jewel in the Walmart crown, Asda has been milked by Walmart. Once seen as the cheapest grocer, Asda is around 15 per cent more expensive than German discounters Aldi and Lidl.
The irony is that former CEO Andy Clarke could see exactly what the discounters were doing and tried his hardest to close the price gap with the discounters, but Walmart wanted Asda to make a big profit so it insisted that profits were important not sales.
Shoppers voted with their feet and decamped to Aldi and Lidl, which resulted in Asda becoming the worst performing big four supermarket over the past three years.
Asda used to engender great loyalty among its shoppers, but once it let them down on price, their loyalty swiftly disappeared. Why should shoppers prop up Walmart, the world’s biggest retailer?
Retail analyst Clive Black at Shore Capital said that current CEO Sean Clarke deserves credit for what he’s done with Asda, but he was given more resources than Andy Clarke.
Under Sean Clarke, Asda has seen a return to sales growth after a number of disappointing years. Asda reported its first positive sales growth in three years in August, driven by food price inflation and lower prices. Like-for-like sales rose 1.8 per cent in the three months to June 30.
This was the first positive quarter after 11 consecutive quarters of diminishing sales. It was also a vast improvement on the 7.5 per cent fall that Asda reported over the same period last year. Sean Clarke has been credited with reducing prices, getting rid of superfluous stock and introducing discount level brands such as Farm Stores.
Mr Burnley has a long and distinguished retail career that includes multiple roles with Sainsbury’s and at Asda. He said that Asda is a great business and the firm has started to realise its potential again. Sean Clarke agreed that Asda is moving in the right direction, but said there is still much more to do.
Once seen as the most innovative part of Walmart, Asda has been starved of resources and its best players have been poached by Walmart.
Mr Burnley will have to stand firm and help Asda rediscover its mojo.