Marketing Wal-Mart

By The Drum | Administrator

May 30, 2005 | 9 min read

Why can’t every American takeover of a British business go as smoothly as Wal-Mart’s acquisition of Asda? No burning effigies, no shoppers threatening to boycott the store and set up their own supermarket chain – just profits, increased market share and lower prices for the customers. Maybe Mr Glazer should back out of his current dealings and launch a daringly auspicious move to buy Farmfoods. Do your research Malc, that’s where the smart money’s headed.

Now, Wal-Mart may be the big bad wolf to a legion of anti-capitalists, corporate anarchists and hemp wearing Levellers fans, but you can’t fail to be impressed by its assault on the UK’s previously rather stagnant supermarket sector. Since swallowing up Asda in June 1999 – sorry, welcoming the firm in to the ‘family’ – Wal-Mart has put the business into overdrive.

The chain now employs almost 130,000 staff, has 265 stores (a number projected to grow this year by 18 new outlets) and last year overtook Sainsbury’s to become the UK’s second most popular supermarket. Despite a slight dip in market share (from 16.6 per cent this time last year to 16.5 per cent – TNS), its position looks secure as the aforementioned Sainsbury’s struggle to catch up (15.9 per cent share) and the threat from the once touted Morrisons falters following the difficult integration of the Safeways brand (share down to 12.2 per cent from 14.4 per cent).

The thorn, or rather bloody big battleaxe, in its side is, obviously, ‘Britain’s own Wal-Mart’, Tesco. With a 29.8 per cent share its sitting very pretty, sticking a couple of fingers up to the rest of the pack and very probably enjoying a glass of fizzy vino from its ‘Finest’ range. And who can blame it.

However, the battle between the front two appears to be hotting up into a bit of a catfight this year as, in the green corner, Asda unveiled its new brand champion Sharon Osbourne, while in the blue corner Tesco (through Cherokee) got its claws out with Naomi Campbell. Is this the pre-cursor to a celebrity (mud) wrestling match we wonder?

In a bid to find out how the battle for retail hegemony will evolve, not to mention why a family store has employed an ambassador with such a ‘colourful’ background, Adline was delighted to sit down for a chat with Chris Pilling, marketing director at Asda, and probably close personal friend to Shaz.

The immediate question is why? As lovable as Mrs Osbourne is, surely she’s a bit of a loose cannon to target consumers with?

“Well, there’s no point in saying there’s not risks involved,” admitted Pilling in a voice suggesting that he may have had to defend the choice once or twice before. “It was a big decision to take, so obviously we undertook a huge amount of research and we were both amazed and enthused by the results.

“Over 80 per cent of our core customers associated Sharon with being a fantastic mum and the glue that holds the family together. We wanted to focus on our core audience of mums, and particularly young mums, as they’re looking for outstanding value and they ‘shop the whole shop’. We wanted to reach them with something that was innovative, impactful and creative – something different. That’s why we thought, given her profile and attitude, Sharon Osbourne was perfect.”

He continued, “Yes, she’s had a colourful life, and her family could be called somewhat dysfunctional, but a lot of families in the real world aren’t perfect, everyone has their problems. It’s because of that that people can relate to her and they respect her. She manages to cope with whatever difficulties she faces and she’s successful with it. Our research highlighted all these shining attributes and this far outweighed any concerns we had. So, we decided to go for it.”

After such a heartfelt defence of Mrs Ozzy it seemed churlish to press the issue and continue to play on any inherent risks of the strategy. Although it was tempting, and intriguing, after Pilling commented that she had ‘balls’.

Tucking any interesting anatomical issues to one side, it’s not inconceivable that the Osbourne’s may eat Asda produce from time to time, but I can’t imagine they frequent the non-food aisles quite as much. Can you imagine Ozzy’s reaction if Sharon came home from the shops with a couple of three packs of George undies. “I’m meant to be the Prince of bloody Darkness Sharon, I’m not wearing them.”

Nevertheless, non-food appears to be the route Asda are increasingly headed down, with a noticeably greater verve and determination than any of its competitors. I asked if this was something that was set to accelerate with the appointment of new chief executive, Andy Bond – the head of the George clothing division for four years.

“The emphasis on non-food and clothing is definitely set to carry on and accelerate,” admitted Pilling with refreshing candour, “but that’s not because of Andy stepping up to the role of chief executive. It’s about the strengths of this business.

“Customer trends show that proportionally there’s less money being spent, in percentage terms, on food than there ever has been. There’s been a gradual decline over the last decade as real incomes have increased. People are now spending more on leisure and non-food orientated goods, which is why we’ve seen prices tumbling in the electrical market, and it’s the same story with clothing.”

He continued: “In that sense our focus on non-food [Asda stocks a staggering 12,000 non-food lines] shows that we are truly reflecting what’s happening in society and providing real capability for our customers. When you add to that the fact that out parent company is the world’s biggest retailer, with a huge pedigree in non-food, that gives us phenomenal buying power and simply allows us to play to our strengths and pass on keen prices to the customer.”

With the devil tapping Adline’s shoulder it’s difficult not to cock an ear and then ask if this too isn’t a dangerous path to tread – could over emphasis on non-food alienate food shoppers? Could they begin to view Asda as a cheap department store rather than a supermarket?

“Saying that we’ll become a department store is overstating the case,” retorted Pilling. “There’s absolutely nothing wrong with the customer perceiving Asda as a place where you can buy everything – that’s something we actively promote, especially when people have less time on their hands.

“People currently come to Asda to buy food first and foremost, but while they’re in the store they have a good time buying other products they want too, whether that’s clothes, music or ‘back to school’ products. That all adds to our proposition, and becomes another nice reason for shoppers to visit Asda. We’ve got bigger sites than anyone else, and if you’ve got bigger shops you can put more in them, so we take advantage of that and so do our customers.”

Those of you that live in the Altrincham and Walsall areas of our Fair Isle may have noticed that a new Asda entity has beamed down into your neighbourhoods – Asda Living. As if to consolidate the move towards non-food these stores deal exclusively in, you’ve guessed it, non-food. So, is this where Asda see a gap in the market for real growth, how many more of these stores are planned for the coming year?

“I can’t tell you that,” is the response from a cheerfully unco-operative Pilling. “What I can say is that we’re delighted with how the new concept is taking off, and they’re doing well enough for us to open more.”

However, in the fast moving world of retail a trail is usually only blazed for a short time before other firms hot foot it after you. And, guess what, it looks like Tesco will soon be sprinting into this new sector too. So is Pilling worried?

“I think, in all honesty, that if there is a race for space Tesco will just have to do the maths and see if the numbers stack up. I do think we have a natural advantage in non-food because traditionally we’re very strong in it, we have the Wal-Mart connection and in George we have a fantastic brand [Incidentally, for those of you who missed it on the news, in volume terms Asda has now overtaken M&S as the UK’s number one clothes retailer]. It’s a huge opportunity for us. Whether Tesco can pull it off or not, well, only they know that.”

The marketing for Asda Living has, to date, been on a purely local lvel, but there may be national opportunities for agencies in the future as Pilling spoke about “hitting the gas” if, sorry this is Asda, when, “critical mass is reached.”

Finishing on a topical note, US makeovers might not be everyone’s cup of tea, but as Asda approaches its 40th birthday you have to admit that it’s looking pretty good. If certain other US business powers wield the same Midas touch as Wal-Mart you might see a lot of red-faced devils, with taped season tickets, in the very near future. Mind you, even if they boycott Old Trafford at least they’ll know where to pick up a cheap telly to watch the game.


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