While attention is focused on the first rise in food price inflation since March last year, the latest checkout data from Kantar Worldpanel also provides valuable insight into the grocery market itself.
black eye In particular, it highlights the continued success of the two largest companies in the market. Tesco and Sainsbury’sIn terms of moving away from the rest of the herd.
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Sainsbury’s, led by chief executive Simon Roberts, appears to be in particularly good shape: its grocery market share was 15.3% in the 12 weeks to August 4, up from 14.8% in the same period last year.
Most of the share taken by Tesco and Sainsbury’s came from the other two established members of the ‘big four’. Asda and Morrison – The latter in itself new CEO Lamy Bytie has regained sales growth and its market share appears to have stabilized.
Tesco executives in particular are said to hold in great respect Mr Baitier, a former colonel in the French Air Force who previously headed the domestic operations of French grocery giant Kapoor.
Asda, on the other hand, seems to be in a very bad situation.
Asda’s surprising demise
During that period, market share fell from 13.7% a year earlier to 12.6%, a surprising decline.
It doesn’t seem like it was that long ago that Asda overtook Sainsbury’s to become the second-largest company in the market. At the time, Asda’s chief executive Tony DeNunzio celebrated the occasion by offering an extra day off to all of its 125,000 UK employees.
But in fact, that was a long time ago, in August 2003, when Asda, then owned by the American retail giant Walmart, had a 17% market share, while Sainsbury’s had 16.1%.
However, a change in leadership under then-chief executive Justin King saw Sainsbury’s reclaim second place in 2013.
The two companies have been locked in a fierce battle over the years since, but Asda hasn’t been able to crack second place since late 2019, with Sainsbury’s holding onto the top spot since then.
What’s going on?
So what went wrong at Asda?
Simply put, a tremendous upheaval has occurred.
In October 2020, while the pandemic was still raging, Walmart Sold most of its stake in Asda. – in a deal valued at £6.8 billion – was acquired by private equity firm TDR Capital and brothers Mohsin and Zuber Issa, who were best known for founding the then global convenience store and petrol station retailer EG Group.
(LR) Director Mosin and Director Jubert
There was initial optimism as Walmart maintained a strategic 10% stake in Asda, giving the retailer access to Walmart’s buying power.
But the financial engineering behind the deal (the buyers raised £2.75 billion by selling bonds secured by Asda’s property assets, putting just £780 million of their own capital at risk) meant that Asda ended up being a highly leveraged company.
Warning signs
There was no need to go far from the city. Find people who are interested As a result, Asda said it would lose its competitive edge, with the Financial Times describing the brothers as on a “financial high-flying run”.
Early warning signs emerged in August 2021 when high-profile figure Roger Burnley stepped down as Asda chief executive following reports of a feud with his brothers over strategy.
Asda approached a number of high-profile industry figures but failed to appoint a successor, and the search was called off in early 2022. Now the search has been restarted, led by headhunter Spencer Stuart, with reports suggesting the right candidate could be offered a £10m-a-year salary.
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A series of criticisms
Meanwhile, Asda’s high borrowings have weighed on the company, which came to the attention of the Competition and Markets Authority last year, which investigated whether drivers were being overcharged for fuel. Loss of competitiveness Asda was previously seen as an industry leader in cutting petrol and diesel prices.
Last July, the Corporate Selection Committee encountered an even more embarrassing situation. criticized his brothers The “opaque” accounting came after a bitter trial in which the board refused to answer questions about whether Asda had improved its fuel profit margins since taking over.
As the feud between the brothers continued, stability was further undermined.
This was strongly denied, but in June this year Zuber Issa agreed to sell Asda transferred its 22.5% stake to TDR, giving the latter a controlling 67.5% stake. In a move that reinforced the sense that the brothers were going their separate ways, EG Group sold its remaining UK petrol stations to Zuber for £228m, with Zuber stepping down from the EG Group board in the process.
Many of Asda’s operational problems can be traced back to its CEO and his relative lack of experience in supermarket retailing.
Photo: Asda
There were several things Conflict with unions Long-serving employees have complained about the company’s staffing levels, and moves to separate Asda’s IT systems from Walmart’s have also caused upheaval.
lose patience
Efforts to keep the show running smoothly and bring order to the chaos have been led by Lord Rose of Monewden, Asda’s chairman since 2021. Michael GleasonChief Financial Officer.
But even Lord Rose, a figure lauded in the retail industry for his leadership of Marks & Spencer in the 2000s, appears to be losing patience, telling the Sunday Telegraph at the weekend: “I’ll be honest with you, I’ve been in this business a long time and I’m a little embarrassed about it. I won’t deny it.
“I don’t like being number two, number three, number four. And if you look at the comparative figures from Kantar and other indices now, honestly, we’re not doing as well as we should be. And I don’t like that.”
Lord Rose, who declared that Mosin should give up the day-to-day running of Asda, said: “We need a full-time, experienced retail manager. We have always said that Mosin is a special horse for a special category.
“He’s a disruptor, an entrepreneur, a demagogue. We’ve added a significant number of stores and changed a lot of things, but now we need another animal.
“In the best possible way, Mosin’s work is almost complete.”
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embarrassment
Adding to the dismay of those who have long admired Asda, Morrisons, whose Bradford headquarters are just 10 miles from Asda in Leeds, is showing signs of change despite being taken over by private equity like its rivals and left in deep debt shortly after Asda’s takeover.
And that’s because Morrisons is more stable than Asda and has a capable supermarket operator in Mr Baitieh as its boss, backed by former Tesco chief executive Sir Terry Leahy and a senior adviser to private equity firm Clayton Dubilier & Rice, which now owns Morrisons.
The industry’s bible, The Grocer, wrote last week that Mr Bytie had “inspired Morrisons with a back-to-basics approach that embraces the spirit of founder Ken Morrison”.
The article continues: “Just this week Bythie travelled to Cornwall to attend the opening of a £12m sardine factory in Redruth, the latest sign of his leading-from-the-front approach as he visited stores, met staff, spoke to workers and spoke passionately about Morrisons’ 125-year history.
“On the other hand, critics say that when Mosin met the military, he appeared ‘cold’ and ‘arrogant’.”
What’s ominous is that the article quotes Nadine Horton, national executive of the GMB union, as saying: “Asda has a real problem with its brand and its identity.
“It’s lost its sense of being a retailer for working-class families. I represented workers when Wilko went into administration and there are worrying parallels. The owners seem to have forgotten what they represent.”
Hopeful Signs
It’s not all over for Asda yet.
There are a number of high-profile new hires set to join the company in the coming months, and it also appears that Gleason is listening more closely to customers, with the company announcing last week that it is adding more checkout staff.
But I can’t help but feel that we urgently need a full-time CEO.
