Life after Leighton

Wal-Mart successfully entered the UK market with the purchase of Asda, steered by Allan Leighton’s indomitable marketing style. In the wake of his sudden departure, however, serious questions are being asked about Wal-Mart’s ability to sustain

They were rarely out of the headlines. They spun stories on issues from VAT on sanitary towels to fighting rip-off Britain. In the process, they helped build supermarket chain Asda into the UK’s third biggest supermarket retailer and shored it up for its £6.7bn sale to Wal-Mart a year ago.

But now, Archie Norman is spinning stories for the Tory party (as shadow environment secretary), and his protégé Allan Leighton announced last week he was leaving the supermarket group to take up a variety of roles at different retailers.

As a double act, they were unbeatable. Archie Norman was the chief executive – intense, introspective, a masterful businessman. And Leighton, his assistant in various guises, had the common touch, took a degree in business studies at Harvard and brought a new meaning to staff relations.

But above all, they were marketers. Indeed, they both served spells in the nominal title of Asda “marketing director”. They brought a personalised, faddish style of management to the UK supermarket sector. Asda’s marketing, relying heavily on PR, seemed natural, not learned out of a book, just an outcrop of their personalities.

Leighton’s departure will undoubtedly have an impact on the Asda brand. It was his continued hold on the reigns after the Wal-Mart merger – when Norman resigned as chairman – that enabled Asda to retain an identity of its own.

It was Leighton who, despite his enthusiastic embrace of Wal-Mart’s values and culture, was the last barrier to complete colonisation.

One industry observer says: “When Allan goes, part of the Asda brand will go with him.”

This is even more likely given Wal-Mart’s choice of successor. Rather than appoint an executive who has been groomed by Leighton himself, such as current marketing director Richard Baker, the company has hedged its bets on Wal-Mart’s present boss in Canada, Dave Ferguson.

Few believe his experience in Canada will have prepared him for the distinct retail environment waiting for him in Europe. One industry insider says: “Believe it or not, Ferguson has foreign experience as far as Wal-Mart is concerned. Having had Leighton-the-individualist in the job, they will now want someone who will toe the party line.”

Leighton joined Asda in 1992 as group marketing director after 17 years at confectionery group Mars. In 1996, he was promoted to chief executive, a position he held until Asda’s merger with Wal-Mart. And then last November, Leighton was given the title of president and chief executive for Wal-Mart Europe. His brief included sorting out Wal-Mart’s disastrous operation in Germany – an operation which analysts estimate has lost the Wal-Mart group $2.2bn (£1.47).

The official line espoused by Wal-Mart bosses and Leighton himself is that he is leaving for “personal reasons”. He says he no longer wants to work for a single company and is looking forward to diversifying his business interests. And despite a reaction from the City which saw Marks & Spencer’s share price take an unusual upward hike, Leighton denies he is set to replace Peter Salsbury at the helm of the ailing retailer.

A source close to Leighton, says: “Allan has been in talks with Marks & Spencer over the past couple of weeks, but he has decided the job is not for him. He knows that he is wanted but he also feels there is not enough impetus to change in the company.”

But as the dust in the immediate aftermath of Leighton’s announcement began to settle, many observers began to question the meticulously prepared reasons for his departure.

Some took a conspiratorial view. Richard Perks, retail analyst at Retail Intelligence, says: “When you think about it, it seems an odd move. The whole thing doesn’t quite add up. The timely announcement came with a successor already waiting in the wings.”

Another observer says: “I don’t think his exit was purely voluntary. There is a school of thought that Wal-Mart wanted one of its own in there.”

And it is not hard to see why this theory has its adherents. Leighton had overall responsibility for Wal-Mart’s operation in Germany. After a year in the job, no tangible improvements have been made to the loss-making venture. Wal-Mart continues to struggle to find a formula that works in the country that, with Aldi, was the birthplace of the discount store.

Others believe Leighton’s departure could have something to do with Asda’s recent performance. Andrew Marsh, an analyst at stockbrokers Charter House, says: “We firmly believe there has been a slowing down at Asda as far as trading is concerned. A year ago it was able to ride on the publicity of the “rip off Britain” wave. But this is now coming to an end. If it wasn’t a private company, I am sure its results would reflect this.”

But for Leighton’s legion of loyal followers, a far more plausible reason for his departure was his frustration and impatience with Wal-Mart. A source close to Leighton, asks: “Why would Allan want to be president of two per cent of the business? He doesn’t want to move to Arkansas, so he has little choice but to seek new things.”

He adds: “The truth is probably that Wal-Mart is too conservative for Leighton, who is very entrepreneurial and eager to get things done. Wal-Mart probably wasn’t fast moving enough for Allan, and because he wasn’t the boss he wasn’t able to do anything about it.”

But whatever the reasons attributed to Leighton’s departure there is a consensus that he will be sorely missed.

Ever since Leighton and Norman relaunched Asda based on the Wal-Mart model – offering everything from every day low prices to the “Asda chant” – it has been Leighton who has been the public face.

Importantly, it was Leighton who was able to adapt the Wal-Mart way of doing things to the UK. One source says there is now a risk that Wal-Mart will become less sensitive to the cultural differences that Leighton so successfully managed.

He says: “Leighton was able to prevent Wal-Mart from falling into the classic corporate ego trip in the UK. In Germany, Wal-Mart strode in and was instantly in your face, which put a lot of people’s backs up.”

And a source close to Leighton also believes that there is a risk that a replacement from North America could undermine Leighton’s efforts to shape the Wal-Mart model to European trading conditions.

He says: “The whole proposition is different in the UK and Europe. The company is working at completely different levels of competition. In the US, one in three Coca-Colas are sold in Wal-Mart stores. It has a complete grip on the market and no one gets even close.”

He adds: “The culture of Wal-Mart in the US was born of the middle-America service culture which we sometimes laugh at, like the way we laugh at McDonald’s, Home Depot or Coca-Cola.”

But he believes this distinction could become blurred. He says: “The inevitability of being purchased by Wal-Mart was not about retaining the Asda name, but was about using Wal-Mart’s aggression and beliefs.”

Scott was once quoted as saying “Asda is more Wal-Mart than Wal-Mart itself”. The quotation may just give a glimpse of what is to come. With Wal-Mart about to unleash its brand on the UK public with the launch of its Bristol superstore, it seems likely that Leighton’s departure could be the beginning of the end for the Asda brand.

And by consolidating Wal-Mart Europe’s advertising to just one agency, Publicis, Wal-Mart seems to have opened a new chapter in Europe.

Leighton and Norman eschewed conventional advertising as they strove to build the Asda brand through their innovations in stores. These included quirky American-style ideas such as having red baseball caps that people put on to show they want to be left in peace.

And when it came to ads, the duo rejected the glitzy creativity of Sainsbury’s or soap-opera style of Tesco and Somerfield, they stuck instead to the “tap of the pocket” campaigns denoting the chain’s value positioning.

It was Leighton who was credited with forging and sustaining Asda’s ten-year relationship with ad agency Publicis, which produced these ads. With Leighton gone, many believed that the Asda account was up for grabs.

But the eager agencies are in for disappointment because it has emerged that, far from losing its grip on Asda, Publicis has become even more closely intertwined with Wal-Mart’s top brass.

Two months ago, Publicis was appointed as the creative agency to look after the entire Wal-Mart Europe account by the retailer’s US president, Lee Scott. The UK, where the account is worth an estimated £100m (including Asda), is not the only market where Publicis holds sway. Publicis also holds the Wal-Mart Canada account.

As Publicis group chairman Rick Bendel says: “We have been told we are considered to be one of the family. We are the custodians of the Asda brand in the UK and will become the regional centre for the Wal-Mart brand in Europe.”

Bendel likens his involvement with the Wal-Mart experience to a drug. He says: “I had my first hit about ten years ago and now I am an addict. I firmly believe that within 15 years, Wal-Mart will be Europe’s biggest retailer.” Whether or not he is suffering hallucinations remains to be seen.

Observers are wondering whether Ferguson’s UK Wal-Mart will keep up the sheer pace of publicity stunts, price campaigns and other marketing techniques which characterised Leighton’s tenure.

Otherwise, Wal-Mart may have to look to advertising to provide the personality it will undoubtedly miss with the departure of Leighton and Norman.

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