Allan Leighton, the newly appointed chairman of ASDA, has candidly admitted to the supermarket chain’s struggles, announcing plans to implement major turnaround strategies aimed at reversing years of declining sales and profits. Leighton, who took on the role last November, conveyed the serious nature of ASDA's challenges as sales dropped five percent and market share dwindled, falling to 12.6 percent from 13.7 percent over the past year.
During his first public address since taking over, Leighton stated, "It’s pretty difficult to say the business isn’t struggling when its sales are down five percent." This frank acknowledgment underlines the urgency for ASDA to redefine its strategy and regain lost customer trust amid stiff competition within the UK grocery market.
Years of decline can be attributed to various factors, from leadership instability to operational inefficiencies. Leighton pointed to the previous management under co-owners the Issa brothers, noting, "The previous stewardship... ripped the heart out of the colleagues," referring to the adverse effects these changes had on employee morale and customer service.
Now, with Leighton at the helm, ASDA is embarking on a turnaround plan intended to rebuild the brand's identity and competitiveness. "Our job is to fix it, but not just to fix it. We have to build it, reset it, turn it to what it was," he declared, outlining his long-term vision for the chain. The turnaround is estimated to take between three to five years, and he emphasized the importance of gradual, consistent changes rather than superficial fixes.
One of the key areas of focus will be enhancing the pricing structure to attract customers back to ASDA stores. A significant part of this strategy is the relaunch of the renowned Rollback pricing initiative, aimed at providing average price reductions of around 25 percent across 4,000 product lines. Leighton explained, "Rollback lines are certainly playing a bigger part in customers’ baskets," reinforcing the notion of building value, which, according to analysts, will help establish ASDA as the lower-priced supermarket option over its competitors.
To support these pricing strategies, ASDA is also planning to rationalize its product range significantly. Leighton revealed plans to reduce its inventory from around 30,000 SKUs to between 24,000 and 25,000. This culling of product lines is intended to streamline operations, improve inventory management, and ideally increase volume sales per SKU. He stated, "The idea is not to sell less, but to sell more per SKU. This is all about enhancing our product range and correctness on the shelves.”
With the commitment to cutting unnecessary SKUs, ASDA anticipates fewer headaches managing logistics and increased customer satisfaction, as the quality of availability improves. Reports suggest availability has already risen to 94% since Leighton assumed his role, highlighting early indications of successful operational adjustments.
Despite these promising initiatives, the road to recovery will not be without its difficulties. Thirty senior managers have already been let go to streamline operations, with over 200 employees losing their positions amid IT upgrades and restructuring efforts. While the necessity of these changes is apparent from the numbers, they have inevitably led to lower staff morale. There are numerous reports of employee dissatisfaction, with one staff member expressing, "Morale will be rock bottom. Even Allan [Leighton] won’t be able to pick them up from this." Leighton acknowledges these challenges but counters by stating, "Morale is actually very, very good, particularly in the stores” and highlighted the introduction of performance-based bonuses as a way to lift spirits moving forward.
Leighton’s long-term approach also involves significant investments to upgrade ASDA’s store environment, with aspirations of refreshing the shopping experience. ASDA has allocated £2 million for the revamp of its Pillsworth store, intended to become the prototype for future locations. Offering modern aesthetics and improved lighting alongside dedicated sections for specific categories, the revamped store is projected to set the stage for broader redesigns across the network.
A continued focus on offering great value to customers remains the backbone of ASDA’s strategy; Leighton believes this commitment will allow ASDA to effectively compete with discounters without sacrificing long-term profitability for short-lived promotions. This concept is deemed necessary as the market shifts amid rising food inflation. Citing his past experience as CEO of ASDA, Leighton said, “I could get the sales up tomorrow by doing promotions—but that's not the answer.”
Looking forward, ASDA aims to assert itself again as the go-to supermarket through consistent pricing, product availability, and enhanced employee morale and customer service. Leighton’s phased approach emphasizes incremental changes over drastic or hasty decisions, asserting his faith in ASDA’s legacy and inherent market potential. "This is the start of strategic investment," he stated firmly, warning of short-term profit declines due to the extensive investments necessary for long-term stability.
While the challenges are substantial, Allan Leighton’s commitment to returning ASDA to its former glory remains unwavering. By prioritizing the fundamental business tenets—fair pricing, product availability, and positive workplace culture—ASDA sets the stage for what could be a compelling comeback story within one of the UK’s most competitive industries.