Asda finally get local
Seeing as it’s a bank holiday, is it just me or do you also remember those bank holiday Mondays when you used to have to pop to your overpriced corner shop for that pint of milk or tin of soup to keep you going until the supermarkets opened on Tuesday?
Those days, of course, are long gone now that every major food retailer has their own ‘lo-cost’ and ‘lo-cal’ stores on virtually every street corner. Tesco, Co-op, Sainsburys, M&S – you cannot walk five yards down the street without bumping into one, both or sometimes all of them.
But how many Asdas do you bump into? Yes, you had to think then didn’t you. The reason is because Asda has only opened 23 smaller supermarkets since 2003.
Now comes the news that Asda is belatedly joining the local party after netting 193 Netto stores for an eye-watering £778m yesterday. In so doing the Walmart-owned group has, in one fair swoop, achieved its goal of becoming number two in UK food retail behind Tesco. But most significantly of all it will start to move Asda away from being a ‘big box’ retailer (more than 80 per cent of its stores are at least 46,000 sq ft) into a more rounded supermarket group.
Asda needs this tonic. This month it reported its first quarterly drop in sales for four years while, according to industry watchers, it has been losing market share for five consecutive months. With VAT rises on the horizon and a depressed retail market set to last for some time yet, these will remain tough times for some time yet.
It does seem extraordinary though that Asda has been so late to join this party. The quiet revolution in the convenience store market over the past decade has been one of the most significant ever in UK retailing, a revolution that began when Tesco bought 1,200 T&S Stores in 2002.
I remember fondly an interview I did with T&S chief executive Kevin Threlfall just after that deal. Threlfall, a real visionary in the industry, correctly predicted that the deal would “send a shiver" through the whole convenience store sector and he was completely right. However it just seems that that shiver took a lot longer to find its way to Asda’s Leeds HQ than to others. As Threlfall told me: “It is an industry that is so fragmented that the range of standards go from the sublime to the ridiculous.”
Threlfall also had a parting shot that day which still rings as true today. "You have to be almost paranoid that someone is trying to steal the clothes off your back in our industry. If you do not, you become complacent and lose your leading edge. Tesco have a paranoia about people stealing market share."
Asda, and its new chief executive Andy Clarke, you have been warned.
You can read read my full interview with Kevin Threlfall.
Any comments? Email Jim Pendrill, Yorkshire Business Insider