Asda chair Allan Leighton’s four point game plan

Asda chair Allan Leighton has laid down his game plan for turning around the UK’s third biggest grocer and “regaining customers’ trust”.

The supermarket chain saw its like-for-like sales slide 3.4% last year as consumers headed elsewhere for their weekly grocery shop. It was also the only grocer to see its sales fall over the crucial Christmas trading period, according to Kantar.

Leighton, who labelled the results “disappointing”, is fronting an Asda transformation he estimates will take between three and five years.

“This is not a short-term, quick fix. In fact, that would be completely the wrong thing to do. What we’re trying to do is build something for the long term, and therefore that will take time.

“We’re looking for incremental improvements, rather than staggering shifts,” he says.

The turnaround is already underway and the business warned this week of softer profits next year as it ups its investment into getting things back on track.

“I look at this as an investment warning rather than a profit warning, and the sign that we have built a significant war chest, and then the art is to utilise that,” he says. So, what exactly does the returning Asda veteran have up his sleeve?

1. Price

Price – or more importantly Asda price – underpins Leighton’s entire strategy: Get the price right and shoppers should start funnelling back into stores.

The supermarket kicked off the year with the relaunch of its iconic Rollback proposition and Asda Price slogan, which saw 4,000 lines cut by an average of 25%.

Leighton says that “Rollback lines are certainly playing a bigger part in customers baskets” as he confirms that “about 25%” of the ranges have now been rolled back.

“The way people think about it is some sort of promotion, it’s not, it’s the way we do things around here and it’s a consistent programme that goes on for a period of time,” he explains.

“Rollback isn’t a system, it’s something that you always do that then gets you to an Asda price that then eventually leads you to certainly being the lowest price supermarket in the industry, by some way.

“In 12 months, probably around 80% of the lines will have been rolled back and therefore at an Asda price,” says Leighton.

2. Product ranges

Range rationalisation and getting the product mix right is also front of mind for Leighton. According to the chair, the supermarket chain is “over SKUed in certain areas”.

“We’ve probably got 30,000 SKUs roughly in the business, we probably need in the 24,000 to 25,000 range, so we’re 5000 over SKUed roughly,” he says.

Leighton hopes to get the adjustment made within the next 12 months.

“We’ve already started as we’re going through the range reviews and the range price architecture by category, and we’re adjusting both that and the way the product is displayed on the shelves,” he says.

“The idea isn’t to sell less, the idea is that you sell more per SKU.

“This is all about, how do you enhance the range, how do you get the right amount of SKUs, how do you get the right amount of space, what’s the right range, price architecture? It’s pretty basic stuff, but it’s there to grow the business, not contract the business, so it’s good for suppliers and you get more volume.”

Leighton adds that “availability is much, much better in store”, increasing from 90% to 94% since his return.

3. People

Leighton’s return has certainly provided a welcome sight for Asda employees, and the supermarket boss is keen to rebuild staff morale.

He previously told The Times that the retailer’s former stewardship under the Issa brothers had “ripped the heart out of the colleagues” when the business cut back on staffing hours to reduce costs.

The supermarket has since invested £43m in store hours during the second half of last year. Leighton says people in the business now “have a degree of hope”, explaining “that’s half the battle”.

“More importantly, they’re aligning, they know what we’re good at, and they know what we need to fix, and that’s what we’re doing,” he says.

Keen to address the upset caused by the decision to remove bonuses this year for managers, Leighton says, “We are putting in place this year a scheme which is about what individuals do, not what the company does. So this year, in Asda, if you do your bit, you get your bonus.

“That has gone down incredibly well within the organisation, because the bonus schemes of the past were based on the performance of the company, not on performance of the individual,” he notes.

4. Store experience

The three earlier points all funnel into Leighton’s plan to improve the customer experience, but that’s not to say that the Asda store estate won’t see some cosmetic upgrades over the next 12 months.

The retailer unveiled its newly refurbished Pilsworth store in Greater Manchester at the start of the month, following a £2m investment.

The Asda store saw its layout simplified with a consolidated food hall, feature lighting and signage updated, new low-level chilled units installed and its George and general merchandise departments modernised.

“There are lots of very good things in Pilsworth and therefore we will look at that very carefully. The store is trading really well, but there will be elements of that that we will roll into the rest of the business,” Leighton says.

However, he states that “our number one thing isn’t sort of shiny new toys in a strange way, our number one thing is: you go to our shops, it’s great prices, the products available, and the people are really nice.”

While things may be slowly starting to look up for Asda on the shop floor, Leighton’s warning about the hit on this year’s profit proves he’s only just getting started.

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