Asda boss departure reveals sweeping change among supermarkets

Asda Fancy Dress

The departure of Andy Clarke from the top job at Asda means that each of the big four supermarket chains have changed their chief executive in the past two years.

Since July 2014, Justin King has retired from Sainsbury’s, Philip Clarke has been pushed out of Tesco and Dalton Philips has been sacked from Morrisons.

That is a clear sign of the tumultuous change in Britain’s grocery industry. The discounters Aldi and Lidl have taken market share at one end of the grocery market, with Waitrose and Marks & Spencer grabbing spending at the other. At the same time, online shopping and convenience stores are eating into the sales of out-of-town supermarkets.

It is only a coincidence that Asda announced the change days after Amazon revealed that it is launching its grocery service, Amazon Fresh, in London. Amazon’s announcement also showed how quickly the grocery market is changing.

Asda, in particular, cannot afford to stand still. It has suffered a decline in like-for-like sales, which measures sales in stores open more than a year, for seven quarters in a row. This drop has not been small. In the last three months of 2015, Asda sales fell by 5.8% year on year, the worst performance in its history. In the first three months of this year, Asda’s performance improved, but not by much, to a sales decline of 5.7%.

Judging Asda’s performance is difficult because it is part of Walmart, the biggest retailer in the world, rather than a separate listed entity such as Tesco or Sainsbury’s. For example, it is never clear when Walmart is pushing Asda to deliver sales growth or profits. While sales have been falling over the past two years, profits have held relatively firm.

Walmart, though, has clearly decided that Asda needs to stop losing market share. There had been rumours that Clarke could depart Asda for a year. These increased when the company poached Roger Burnley from Sainsbury’s to become chief operating officer. In fact, the only surprise about the news of Clarke’s exit is that it is not Burnley replacing him but Sean Clarke, a former Asda employee who has been running Walmart’s Chinese business.

The challenge facing Sean Clarke is to stop Asda getting lost in the middle of the grocery market between the discounters and the rest of the big four. Asda had built a niche with customers as being cheaper than the Sainsbury’s, Morrisons and Tesco, while having better quality food than the discounters. This niche meant that between 2010 and 2014, the first four years of Andy Clarke’s tenure, it performed robustly.

However, Tesco and Morrisons have pushed down their prices significantly under Dave Lewis and David Potts, their current chief executives. At the same time, Aldi and Lidl have continued to expand. Suddenly, Asda’s niche has disappeared. Sean Clarke’s job will be to lead a fightback.

Powered by article was written by Graham Ruddick, for on Monday 13th June 2016 19.21 Europe/ © Guardian News and Media Limited 2010


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