Russell Parsons: Asda must work hard to beat “horrible and cheap” perception

My partner hates Asda. A recent suggestion that we go in to pick up some much-needed household items as we were passing was met with a determined refusal. “It’s horrible and cheap” was her blunt conclusion.

Russell Parsons

She might never be an Asda customer, but her – and many others’ – perception of Asda is one of the key challenges chief customer officer Andy Murray will face as he takes over from Barry Williams and aims to reverse a sixth consecutive quarter of sales decline.

Murray’s credentials are impressive. Currently senior VP of creative and customer experience at Walmart, he has earned his retail marketing spurs as founder of shopper marketing agency Saatchi & Saatchi X.

He is a more natural choice for the task of marrying on- and offline customer experience and brand marketing than Williams, who was a merchandiser by trade, but his challenge is no less considerable. Asda’s sales fell by a considerable 3.8% in the three months to 31 January, according to Kantar – the worst performer in the sector and the latest in a year-long run of quarterly slumps.

It could be argued that this is just Asda’s time to fall. The discounter juggernaut derailed Tesco, Sainsbury’s and Morrisons in turn before they saw tiny green shoots of recovery. For Asda and Murray, however, the problems run a little deeper.

Its relentless price focus might have played well in the short term against Aldi and Lidl, but it is not in itself a marketing strategy. From a business and brand perspective, it is not sustainable. There are only so many operational efficiencies that can be forced through before price cuts cause a serious lag on margins and there has to be a point where you go so low in price that all other messages are diluted.

Asda has a quality problem. It sits 10th among grocers in the YouGov BrandIndex quality ranking over the past six months, behind its big-four rivals and Aldi and Lidl. Its ‘Extra Special’ higher-end offering is lost in a sea of red discount labels. Outside Christmas, there
has been little care and attention given to building it as a sub-brand.

Morrisons has fresh, Sainsbury’s has quality, Tesco is investing considerably in in-store experience. Asda needs something other than price – and quick. Otherwise, it will be seen by a growing number of haters as “horrible and cheap”.

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