Asda is struggling for market share as its unique value proposition has been eroded by the rise of the discounters, a former Walmart fresh produce buyer has claimed.
Bruce Peterson, who now runs his own consultancy Peterson Insights, told an audience at the London Produce Show that Asda’s success was built on its position as Britain’s cheapest supermarket and the so-called “pocket tap”. However the emergence of Aldi and Lidl has pushed Asda into the centre ground.
Ironically, having the support of the giant Walmart business may have made Asda less nimble to respond to the new threat, Peterson suggested. “Walmart bought them out and so Asda had the capital to do different things, like George stores and Supercentres,” he explained. “But that means you begin to build an expense structure that you didn’t previously have, and you have to raise your margin to counter it. The discounters came along and Asda can’t be the price leader any more because they have those structures in place now.”
The internet has also caused “tremendous challenges” for bricks-and-mortal retailers such as Asda, he added, particularly as consumers increasingly shops for movies, music and even clothes online. “What do you do with all that space that was formerly devoted to these things? One-stop shopping is very difficult now. For Asda it’s death by a thousand cuts.”
Despite his comments, Peterson stressed that his observations could just as easily be applied to the other big-four retailers and praised the Leeds retailer’s staff’s “us against the world” mentality and “willingness to take on challenges”.
Talking generally about the grocery market, Peterson predicted that produce departments would get smaller in future. “As all retailers like to differentiate, you can’t have a huge assortment and do everything well,” he said. “So buyers will become more demanding of variety-specific procurement. It’s a case of getting away from the idea that they have to have everything all of the time.”
Packaging will continue to proliferate, and produce will be used more and more to market social issues, he said.
And Peterson had a warning for suppliers, predicting that supermarkets would be “leaning more and more” on them to help with their investment in pricing.
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