Former Vice President, Fresh, Frozen & Chilled at Asda and former Buying Director, Iceland Foods
Karl has spent the majority of his career in food retailing, joining Sainsbury’s after graduating in the mid 1980s to work in the trading department. He joined Iceland in 1992 to eventually become trading director, responsible for all buying, with a position on the board of the company. After 5 years in senior commercial positions at UK facilities management business Sodexo, in 2010 Karl joined Asda, the UK’s second largest food retailer, to run the food trading team. At Asda he was responsible for fresh food, chilled food and frozen, categories with combined revenue of ~GBP 8bn and gross profit of ~GBP 3bn. Since leaving Asda Karl has taken on a range of consultancy roles, including a year working for Sainsbury’s Netto discounter concept, where he gained deep insight into the discounter retail format. Read moreView Profile Page
Karl, we spent a bit of time the other week speaking about leadership in detail and drawing on some of the most important moments and experiences in your career. For today, to dive into the industry that you spent most of your working life in, could we set the scene for our conversation with your description of Asda’s customer value proposition within the UK food retail market?
Asda has always seen itself as being the value player amongst the big four retailers. Value being a combination of a number of different factors. Primarily, price. Go back to the 70s and 80s with the pocket tap, Asda price rooted in northern heartlands. That price position has always been incredibly important to the business. It measures itself on five criteria. What it calls its five customer pledges. It’s price proposition and it’s price advantage or disadvantage over its competitors. Its quality position, the two combined give value. Its position on availability, defined by two or three ways. Defined by the way in which you interact with the business. Bricks and mortar, online, click and collect. Size of store, whether it’s a large hypermarket, whether it’s a supermarket, whether it’s in some instances a smaller type operation. Its position on its newness, offers and ranges and events driven Christmas, Easter, Valentines, Mother’s Day, and its position regarding those vis-a-vis its competition.
Then its service proposition. Those pledges are measured every week. Some are very hard and fast. Availability is a hard and fast measure. Measured by a reporting system called OSCA, on shelf customer availability. Price is measured on a weekly basis by pulling all of the data from every other retailer, or certainly at that time, the big four retailers. Measurement on quality is a little bit more qualitative rather than hard, fast data. Queue lengths are measured by an external organization. Every week, first report on a Monday is that report. That’s how it measures its proposition across those five pledges. Price being the most important. The relationship between its price position in the market and its sales and its customer participation or customer count during that week or any given week. There is a direct relationship between the two.
What would be a typical conversation that you might have with other senior executives on the value proposition and what everyone was really driving towards?
When I joined in April 2010, the business had been using Moneysupermarket.com, for about three or four years as its price benchmark versus its competitors. You walked into every store at any given week and they’d be a big banner outside, or a big board outside saying: We were cheapest on 20,000 SKUs [Stock Keeping Units] out of the 32,000 you’re going to buy in store today. As measured by Moneysupermarket.co.uk. It had become a bit tired with customers. Let me concentrate there because I think the market context at the time led to some degree of complacency. The price message was clearly the most discussed and talked about. The business recognized that it was never going to win the battle of perceived quality. Despite the fact they felt they had some good quality products; it was never going to be a platform they could go out on. However, at that time, the price gap to Tesco was about five or six [percent], gap to Morrison’s was probably about six or seven and the gap to Sainsbury’s was probably about nine. They weren’t interested in the discounters. There was no price comparison with any of the discount operators at all in the weekly pricing review, which was a well-engineered and oiled process, which scraped prices from other retailers’ websites at least twice a week and reported back to the traders and to the wider business. They weren’t collecting any comparative data with Aldi and Lidl.