Andy Bond, CEO of Wal-Mart-Owned Asda in the UK, Offers His 'Two Pence' Worth On the Pre-Christmas, Deep-Discount Festival Promotion By Tesco-UK

Asda CEO Andy Bond, in one of the chain's UK supermarkets, says he wants to "rock" the British food and grocery retailing business. He has parent company Wal-Mart Stores, Inc.'s resources and support behind him to do so. (Photo credit: This is Money-UK.

Retailing News From Across the Pond

Yesterday, we reported in this story [Tesco Slashing Prices By 50% on 1,000 Items For Four Days in its UK Stores; Will We See A Similar Promo at Fresh & Easy USA?] about a pre-Christmas holiday promotion Tesco, which owns and operates Fresh & Easy Neighborhood Market in the Western USA, started today in which the retailer is slashing the prices on 1,000 food, grocery and gift items in its United Kingdom stores by 50%. The 1,000 item, half-price promo ends in Sunday.

Tesco's big price slashing promotion comes on the heels of similar pre-Christmas holiday promotions already conducted by UK food, grocery and general merchandise retailer Marks & Spencer (M&S) and the British department/general merchandise chain Debenham's. Tesco and the other retailers are trying to stimulate holiday sales, both on food, drink and grocery items, but even more importantly on general merchandise and gift items for Christmas.

Today, the day after our report and the day Tesco's 4-day, 1,000 items half-price holiday promotion started, Andy Bond, the CEO of Wal-Mart Stores, Inc.-owned Asda, the number two retail chain in the UK after number one Tesco, offered a blistering attack at retailers (he didn't name names but who he meant is rather obvious) who are doing such limited item, price percentage slashing pre-Christmas promotions.

Bond made his comments, which are worthy of the aggressive offensive action expressed by his namesake, British secret agent 007, James Bond, in the movies, in the UK's Independent newspaper today.

Wal-Mart-owned Asda has been focusing on an everyday, deep discount merchandising and promotional program for most of this year, and the chain intensified its discount merchandising model a few months ago as the financial crisis and recession hit the UK hard.

Asda's program has paid off for the chain this year. It's increased sales and gained a tiny percentage market share on rival Tesco and number three food and grocery chain Sainsbury's. Asda currently has about 17% of the UK market to Sainsbury's about 15% Tesco though is head over heels above both Asda and Sainsbury's when it comes to market share. It has an about 31% share of the UK food and grocery retailing market, nearly equal to what Asda and Sainsbury's control combined.

However, Tesco also is losing share to the small-format, deep discount chains Aldi, Lidl and Netto in the UK. Asda is holding its own against these smaller store rival discounters in terms of gaining a small overall share rather than losing any.

Below (in italics) is what Asda CEO Andy Bond had to say about those "no name" UK chains that are launching 4-day, limited items percent off promotions (aka: Tesco M&S and Debenhams).

UK: Asda boss takes swipe at Tesco discounting
The Independent.co.uk

The boss of Asda yesterday attacked the massive pre-Christmas discounts offered by his rivals, in a thinly-veiled swipe at retailers such as Marks and Spencer, Debenhams and Tesco.

Andy Bond, the supermarket chain's chief executive, said: "There are lots of struggling retailers who are confusing customers with 20 per cent off this day, 50 per cent off that day. That will stimulate sales in the short term, but that will not be the way to grow a business in the economic downturn.

"However, Mr Bond declined to name any specific retailers.

His comments came as Tesco said it would cut the prices of 1,000 products, including Christmas food, drink, toys and gifts, by 50 per cent this weekend.

Earlier this week, Debenhams launched its third three-day festive sale, with 20 per cent off many items.

M&S introduced further pre-Christmas discounts yesterday, after holding two one-day sales held in recent weeks.

Mr Bond criticised such hefty promotions as "gimmicky" and claimed that they sowed the seeds of "mistrust" among shoppers. Big sales days were "a horrendous way to run a retailer", he suggested. However, Asda has also held some significant one-off price promotions this year, particularly during the summer when it cut prices on selected items for a few weekends.

Mr Bond said Asda, owned by the US supermarket group Wal-Mart, had no intention of launching a range of discounted brands, such as those introduced by Tesco in September.

"It offers confusion rather than clarity," he said. "Adding a fourth tier to your brand hierarchy – I just don't get it."

Asda revealed that the sharp slowdown in consumer spending had led to radical changes in shopping patterns. For instance, customers are buying smaller portions of food, such as Christmas pudding, and pack sizes, as well as scrutinising sell-by-dates and purchasing more frozen food as they seek to reduce wastage. Mr Bond also said his customers were increasingly cooking from scratch and switching to Asda's cheaper own-brand products.

Asda said sales of hair dyes were up 27 per cent as customers cut back on trips to hairdressers. Sales of curry ingredients had jumped by 40 per cent in the past year, balsamic vinegar had risen by 70 per cent, olives were up by 50 per cent and champagne rocketed by 100 per cent as shoppers shunned restaurants to cook and entertain at home.

The doubling in sales of champagne at Asda also suggested that consumers were seeking value for money and the grocer was attracting more middle-class shoppers, Mr Bond said.

However, sales of some ready meals had fallen by 40 per cent as customers attempted to save money by cooking their own meals.

Mr Bond said he believed the current downturn would lead to a new generation of British consumer, who was more focused on cutting waste, seeking out low prices and spending more time entertaining at home, such as with Nintendo Wii consoles.

He added: "We are moving into an era of the frivolous being unacceptable and the frugal being cool. It won't be everybody, but there will be a type of consumer that will be defined at this moment that will stay with us for a long time."

[-end Independent piece-]

U.S. retailers seldom offer their opinions of the competition let alone go after their practices and programs. That is one of the many reasons we do enjoy the British food and grocery retailing industry.

Now, we just need to hear from Mark Price, the CEO of the UK-Waitrose supermarket chain, which is from a competitive standpoint the hard-charging number two (the upscale food retailing segment) to Marks & Spencer, as Asda is the hard-charging number tow to Tesco.

Of course Price is an equal opportunity fun poker. He loves going after M&S chairman and CEO Sir Richard Rose, who Price calls "The King of Pants" (M&S sells lots of its own brand clothing, along with food, groceries and lots of other things, and its men's pants were named the best quality in the UK this year). The men are friends as well as competitors.

Price also loves digging Tesco CEO Sir Terry Leahy, as well as Asda's Andy Bond. In fact, if one is a CEO of a British food and grocery retailing chain and hasn't been the subject of one or more of Price's jabs in the UK press, or in his own Blog on the Waitrose Website [www.waitrose.com], then there must be something wrong with them.

More "Retailing News From Across the Pond" at the links below:

Stories from the UK press from December 11-12, 2008:

>UK: Tesco And Waitrose Lose Market Shares As Grocery Sector Continues To Slow
>UK: Low-cost supermarkets enjoy boosts
>British retailers brace against downturn
>UK: Somerfield ends independence with sales fillip
>UK: Waitrose suffers first sales drop in 5 years

Wal-Mart and Tesco: The Cross-Atlantic Competition Continues to Heat Up; Almost Hot Enough to Make Uber-Cool British Secret Agent James Bond Flinch

Andy Bond, the CEO of U.S.-based Wal-Mart, Inc.-owned Asda, the United Kingdom's second-larget supermarket chain after Tesco, doesn't have a license to kill like the famous British secret agent he shares a last name with, writer Ian Fleming's James Bond, Agent 007 of book and movie fame. But this week Bond (Andy) has earned himself a license to brag.

Last week, on June 11, Andy Bond-led Asda was the first UK supermarket chain to take home three "Grocer 33" awards at the annual "The Grocer Gold Awards," created and produced by the UK supermarket industry trade publication The Grocer.

Wal-Mart-owned Asda took three first place "Grocer 33" awards in three categories: Lowest priced grocery chain, best service, and best availability. It was the 11th year in a row in which Asda won first in the lowest prices category. However, no other UK grocery chain has ever won three firsts until now.

Upon excepting all three awards, Andy Bond, Asda CEO and president, said: "This is an outstanding achievement and a very proud moment. These awards are a real testament to the fantastic work and dedication of all the colleagues across the company."

Bond (Andy) is walking tall this week. The very next day after the awards ceremony, June 12, Bond and company at Asda took out double-truck advertisments in the major UK newspapers touting the retailer's trifecta of first place awards at the the "Supermarket Oscars," which were held on the evening of June 11 at the swank Dorchestor Hotel in London.

Additionally, word is that in the modestly decorated halls of Wal-Mart, Inc. headquarters in Bentonville, Arkansas, Andy Bond is on his way to becoming Wal-Mart CEO Lee Scott's favorite Bond. It's known Scott has always enjoyed the James Bond movies, but sources now say he has a growing preference and like for international Wal-Mart division CEO's named Bond, even over highly popular but fictitious secret agents with the same last name.

Here's the thing about the UK food and grocery retailing "Oscar's" though: just like the real Oscars, the Academy Awards held each year in Hollywood USA, the winners of "The Grocer Gold Awards" also are chosen not by the people (consumers) but by a panel of industry experts and members of the staff of The Grocer magazine. In other words, like the Academy Awards, the winners are chosen by members of their own industry.

Except for one award that is. That award, "Britain's Favorite Supermarket," is chosen based on a survey of UK consumers conducted by The Grocer. And the winner is: Tesco. Yes, according to The Grocer, Tesco was chosen as "Britain's Best Supermarket" by a poll of consumers, which when it comes to sales is probably the best award of the night that any food retailer could receive.

Tesco also won a "Grocer 33" award (voted on by the experts) for being the UK's best online retailer.

The overall "Grocer of the Year Award," which honors the best across all categories, went to the UK's fourth-largest (in market share) supermarket chain Morrisons, largely the judges said based on its successful integration of the Safeway chain which it aquired two years ago and Morrison's turning in a sterling performance, becoming the highest market share percentage gainer in the industry last year.

The big loser at the modestly refered to red carpet grocery industry "Oscars" at the Dorchester on June 11 was Sainsbury's, the UK's number three (and a very close number two to Asda) supermarket chain. The panel of judges comprised of The Grocer staffers and food and grocery industry experts didn't give one "Grocer 33" "Oscar" to the food retailer. This is odd in many ways in that Sainsbury's regularly receives top marks across the board from UK consumers. Of course, the Dukes of Hazzard movie was a major box office success in the U.S., but didn't fair too well (zero mention let alone an award) at the Academy Awards in Hollywood that year none-the-less.

The "Grocer Gold Awards," which were started by The Grocer in 2003, and now are sponsored by corporations Sony, Barclay Business Bankcard and Reach, Inc., had a brand new category this year, reflecting the industry's increased emphasis on green or environmental retailing. The winner of the new category, "Green Retailer of the Year," was the UK Co-operative Group, which operates food and grocery stores throughout the UK, with an emphasis on sustainability.
The event also awarded numerous other retailer's "Grocer 33" awards in various other categories, along with offering awards in the wholesaler and manufacturer sectors as well. You can view a complete list of the awards and winners here.

Despite losing the coveted "Best Grocer" award as judged by the UK consumers surveyed to Tesco, Asda CEO Andy Bond has earned at least a week's worth of walking on air and bragging rights. After all, even though the Wal-Mart-owned British supermarket chain is number two in UK market share, (it's share a little over 16%), it's market share remains nearly half that of leader Tesco, which controls about 31% of the UK food and grocery market. Therefore, in "if size matters" terms, Asda acheived quite well, according to the Uk industry experts who voted on the winners.

But Asda, which Wal-Mart acquired not all that long ago, has struggled for years to make its mark on UK food and grocery retailing (as well as other forms of retailing as it's a hard and soft goods retailers as well as grocery retailer like Tesco is) and finally seems to be getting its groove on a bit. In fact, just a few years ago there was serious talk by Wal-Mart of selling Asda. However, Wal-Mart CEO Lee Scott has decided against that, and Wal-Mart now is in the midst of a major expansion program for Asda, which includes opening numerous new stores in the UK, as well as remodeling and upgrading many existing ones.

Additionally, the Tesco vs. Wal-Mart competitive battle has taken on new dimensions with Tesco's launch last November of its first small-format Fresh & Easy Neighborhood Market grocery stores in the Unted States.

Even though he won't publicly say so, Wal-Mart CEO Lee Scott does not want Tesco to become a major player in U.S. food and grocery retailing; even a major regional player. That's why in part Wal-Mart is building even more Supercenters and Neighborhood Markets of its own in California, Nevada and Arizona, the three states where Tesco currently has its 61 combination basic grocery and fresh foods small-format (10,000 -to- 13,000 square feet on average) grocery stores.

Additionally, as we've reported on Fresh & Easy Buzz, Wal-Mart starts opening the first four of its own small-format (15,000 -to 20,000 square feet on average) combination basic grocery and fresh foods Marketside grocery stores in the Phoenix, Arizona Metropolitan region this summer.

The Marketside small-format grocery stores have numerous qualitiative or format differences compared to Fresh & Easy: they will be more upscale; the fresh foods will be prepared in-store in a kitchen, as well as having in-store seating for a limited number of shoppers to eat-in as well as pick up take out; price won't be as big a focus as Tesco is putting on it at Fresh & Easy; along with a few other key differences.

However, make no mistake about it: combined with its huge Supercenters and it's 45,000 square foot Neighborhood Markets, there will be a Wal-Mart effect on Fresh & Easy in markets such as the Phoenix, Arizona Metro region, as there is and will continue to be on all retailers in the market, and elsewhere in the U.S.

Wal-Mart currently has 70 Supercenters which average about 180,000 square feet in Arizona, about 20 of its 45,000 square foot Neighborhood Markets (about the same as Tesco's current Fresh & Easy store count), and of course four initial small-format Marketside stores on the way. Wal-Mart is building and opening more Supercenters and Neighborhood Markets in the state, and will likely open far more than just four Marketside stores down the road.

Meanwhile, Wal-Mart's Lee Scott has a renewed interest in building the Asda chain in the UK, some say in part because Tesco has come to Wal-Mart country--the U.S. But of course that's secondary. Primary is simply Wal-Mart's imparitive to be the biggest retailer everywhere, which is the same imparitive which got it to be the world's largest corporation and retailer today.

Scott also reportedly has lots of confidence in Andy Bond, which we are told has been reinforced by winning the trifectra of awards at the June 11 supermarket Oscars in the UK. Of course Wal-Mart's Scott is a numbers and sales man. Industry awards are fine, but for about a day to Scott. But they also indicate forward progress for Asda as judged by vendors and other peers in UK food and grocery circles, which Scott likes to hear, since vendors are a big part of the Wal-Mart international value proposition.

So, this week Andy Bond, unlike his namesake James, gets to step out rather than spend his time out in the cold like Agent 007 did most of the time. Of course Bond (James) had many a lovely companions to spend his spy time out in the cold with, so please to feel sorry for the secret agent.

Awards from ones peers are nice. Just ask the Hollywood stars who win Oscars, despite the films they win the statues for having tanked at the box office in many cases.

But like in Hollywood, the food and grocery retailing business is all about bottom line numbers in the final analysis. Big box office means strong sales and profits in the retail grocery business. Major growth means increased market share.

Wal-Mart-owned Asda has a long ways to go before it will make inroads on market share leader Tesco in the UK. And with UK "Grocer of the Year" Morrisons on a market share roll, Asda, and Bond's (Andy) task is even more formidable. Not to mention Sainsbury's, which dispite scoring goose eggs at the awards ceremony from the industry experts, has been turning in some pretty good performance of it's own to date. In fact, if Asda doesn't play hardball in the James Bond style, it might find Sainsbury's overtaking the Wal-Mart-owned retailer for the number two market share spot in UK food and grocery retailing.

Like the spy world inhabited by James Bond as depicted by author Ian Flemming, namesake Andy Bond lives and works in a near-equal world of intrigue: food and grocery retailing.

There are spys, counter spys, friends and foes alike. The stakes aren't as high as giving ones life--after all Andy Bond has yet been given his license to kill by the Queen--but from a a business standpoint they couldn't be higher. Each additional share of market represents big bucks. And, after all, big bucks--in the form of sales, profits and market share--are the industry's primary scorecards. And like James Bond's famous boss Q., Wal-Mart CEO Lee Scott can be a tough task master.

At home and abroad respectively, Wal-Mart and Tesco are keeping their cool in a way that would make the unflappable James Bond proud. But make no mistake about it, the competition is just heating up in such a way that it could even make the normally super-cool Agent 007 flinch.

While at home in the UK Tesco remains "Goldfinger" with the midas touch, the retailer has heavyweights in the form of Wal-Mart-owned Asda and fellow British supermarket giants Sainsbury's and Morrisons nipping at its market share heels, not to mention that German panzer division, in the form of German discount grocers Aldi and Lidl, both which are gaining significant market share during these tough economic times in the UK.

In the U.S., Wal-Mart's three format press in the Arizona market--Supercenters, Neighborhood Markets and soon small-format Marketside--will test Tesco's fledgling Fresh & Easy stores big time.

None-the-less, Tesco is pressing on and will start opening many more Fresh & Easy stores in Arizona, Southern California and Nevada beginning on July 2, after taking a three month new store opening pause. Further, anybody who rules Tesco out in the U.S. does so potentially at their own peril, even Wal-Mart when it comes to the long term.

Not only is the cross-Atlantic competition heating up, it's nearly as exciting as an Ian Fleming James Bond thriller. Stay tuned.