Close-Up: Live issue - Can Bendel halt the decline at Asda?

competition posed by Sainsbury's, Morrison's and the market leader,
Tesco.

The figures speak for themselves. In the 2006 financial year, 51.7 per
cent of grocery shoppers in the UK regularly shopped at Tesco, while
39.1 per cent shopped at Asda.

More worrying is Asda's balance sheet. In 2006, its revenues grew by
just 3.1 per cent, compared with 19.8 per cent the previous year.

Most retail analysts place the blame squarely at Asda's sluggish
reaction in waking up to the changing consumer perception of value for
money.

The company has classically positioned itself on its cheap prices.
However, many of its customers - even price-sensitive ones - have
started looking beyond the till receipt at quality and product
origin.

"Asda has failed (where Tesco has succeeded) to create and maintain a
democratic offering that caters for all walks of life," Russ Lidstone,
the chief strategy officer at Euro RSCG, says. "Its premium ranges are
weak while its entry-level brands come under increasing scrutiny from
discounters such as Lidl and Aldi."

The company has also struggled with a slow store opening policy, an
absence of local "convenience" stores and a small online presence.

None of these will be easy to crack. Sainsbury's and Tesco have a
massive presence in both the physical and online world and Asda realises
that changing the product perception will only go so far if these issues
aren't addressed too.

"Today's consumers shop when they are out and don't go out to shop as
they did ten years ago. The fact that Asda does not have a significant
convenience offering means it is limited in its ability to capture the
planned and unplanned 'top-up' market," Lidstone says.

One area where Asda is making faster progress than its competitors is in
the non-food market, especially with its George clothing range and Asda
Living home furnishings stores. Research carried out by Datamonitor
shows Asda's sales of non-food items have increased by 94 per cent over
the past five years.

And the supermarket is set to build on this by opening its first
new-build standalone George store in Southend next month.

Alastair Lockhart, a senior retail analyst at Verdict Research, says:
"Non-food is a core struggle where Asda has a chance of winning. It
takes a larger percentage of its sales from this category than Tesco
does. The company's ad strategy will be important to any resurgence, but
moving into new revenue streams like these will be vital."

As will Bendel's long advertising experience. He has been hands- on with
the Asda business for 12 years and will know what well- researched and
pitched advertising can do for a retail business.

Advertising isn't the cure-all, though. While Sainsbury's and Marks &
Spencer proved that effective advertising can boost a brand, in both
cases it was underpinned by a strong product offering, a true sense of
brand identity and a strategy that plays to the shop's strengths.

- Got a view? E-mail us at campaign@haynet.com

MARKETING DIRECTOR - Rick Bendel, newly appointed group marketing
director, Asda

"The big challenge is online. Tesco has just experienced an online boom
and that's something Asda must try to match. Also, Asda is an
out-of-town retailer. It has to have a bigger presence alongside Tesco
in the high street.

"It's not that Wal-Mart's acquisition of Asda has not been a success.
People just misunderstood how it would work. The hype was greater than
the reality. Also, US shopping habits are different to those in the UK.
You can't just take something that works in Wisconsin and expect it to
work in Fulham.

"Asda has to develop as a medium in its own right. As people turn away
from advertising, we have to find ways of getting closer to
customers."

AGENCY CHIEF - Ian Pearman, managing partner, Abbott Mead Vickers
BBDO

"The key question is how someone who has helped build this brand for
years and years on the basis of 'Asda price' can begin to work out how
it can compete in a world where price is no longer the battleground.

"Bendel needs to work out how to differentiate Asda for quality and
health, but none of the communications that Publicis has ever done for
the brand shows any aptitude in achieving this.

"Since 'Try something new today', we have tried to change the culture of
the customer that we draw in at Sainsbury's. Asda is just happy to sit
and let the customers come in, but this is not how the market is
going."

RETAIL ANALYST - Alastair Lockhart, senior retail analyst, Verdict
Research

"Consumers have changed dramatically over the past five to ten years. A
supermarket's offer is now no longer about price, but value. Tesco
always offers value, whether premium or discount offers. This extends
its consumer base. Asda is only just beginning to do this and therefore
its customer base is narrower.

"Advertising is a key means of helping it rectify this problem. Look at
its most recent campaigns, particularly the stuff for George - there's
no doubt that this is becoming more aspirational.

"However, realistically, I just don't think it's feasible to think that
it can take on Tesco. Just look at its market share compared with the
rest of the major players."

AGENCY CHIEF - Paul Hammersley, chief executive, The Red Brick Road

"Asda's issue is getting beyond its price positioning. That's its
strength and its weakness. It is known for its prices and little
else.

"There is a genuine shift in attitudes and behaviour towards a concern
for, and interest in, quality. Food quality and better eating are a
major part of Sainsbury's and Marks & Spencer's recovery and a
significant part of Tesco's leadership. Asda has been left behind here
in terms of its offer and its image. The former may be easier to fix
than the latter.

"I'm not sure that Asda can plausibly chase after a quality proposition
and at the same time not lose touch with its value heartland."