News Analysis: Should Asda look forward or back?

Asda has lost the services of Weber Shandwick just when it faces stiff competition to retain its number-two supermarket status. Alastair Ray looks at the comms challenges facing the media's former golden boy.

Asda's parting of ways with Weber Shandwick, revealed last week (PRWeek, 10 June), has come at a crucial juncture for Britain's second-biggest food retailer. Its chief executive Andy Bond, promoted to the role in April, admitted last week that rival Sainsbury's fresh food prowess could soon see it overtake his Leeds-based chain in the battle behind market leader Tesco.

Asda has reacted swiftly to the loss of WS, which resigned the account to allow its senior vice-chairman and ex-Sun editor David Yelland to advise Tesco. It has added its public affairs task to the corporate and financial brief already held by Bell Pottinger companies.

WS's move arguably highlights the fact that Asda is no longer the golden boy of the supermarket sector. The firm's operating profits for the first quarter of this year were described by its parent Wal-Mart as 'below plan'.

It all seems a far cry from the glory days when Allan Leighton and Archie Norman held the reins and could apparently do little wrong.

Bond told the Financial Times last week that his stores had a number of challenges to address. In particular he cited the need to regain clarity on pricing, cut costs and improve service.

Keep the customer happy

Asda general manager for PR Nick Agarwal says the retailer's comms are not aimed at chasing rivals but about keeping customers, both current and future, happy.

'I do not give a flying fig about catching Tesco. We've got 279 stores compared with 1,800,' he explains. 'We are very firmly focused on our customers, be they existing customers or customers that we will obtain through our growth plans.'

As to growth plans he points to the fact that Asda has just purchased 12 new stores in Northern Ireland as an indicator of its ambitions.

In addition to the Bell Pottinger firms, the company continues to work with a number of agencies on the consumer side, including Fishburn Hedges, Bryan Morel PR and Westbury Communications. Its corporate affairs director is Christine Watts, and Bernard Hughes is head of PA. One comms adviser with experience of the sector says the challenge for Asda is that an apparently resurgent Sainsbury's is now squeezing it from below.

'It's going to be difficult for Asda because it does not know who it is - it does not know whether it is Asda or Wal-Mart or from up north,' he says.

Former insiders also cite ownership as a challenge: Asda was taken over by US retail titan Wal-Mart in 1999. 'When it was independent it had a lot more freedom from a communications point of view to tackle some of the big issues,' says Brahm PR managing partner Phil Reed, who worked for Asda until 1998.

And Reed points out that the issues that Asda championed in the 1990s are no longer top of the agenda. Current issues such as health, obesity and planning are not heartland territory for the retailer. 'From a PR point of view Asda needs to find some new platforms,' he says.

One senior City journalist, however, argues that the crux of Asda's PR difficulty lies with its ownership, the fact that it is no longer 'the cheeky northern chain'. 'Asda's got to maintain its position as being not like Tesco, not the juggernaut, when it's part of the world's biggest juggernaut. It really needs to disown its parent to survive in PR terms, but whether the Wal-Mart guys would wear that is another matter,' he says.

Not in crisis

Others, however, take a more benign view. George MacDonald, deputy editor of Retail Week, says it must be remembered that Asda remains a well-run business, the jewel in Wal-Mart's international empire.

The two problems that the company faces are competition and planning, notably restrictions on opening new superstores. 'The fact that it has eased back tends to be read as a disaster, but it's simply a symptom of how much tighter things have become,' MacDonald says.

Some commentators argue that the fact that Asda is no longer listed in the UK means it does not have a regular platform from which to generate coverage, but others counter that this brings advantages.

'Because it is not listed on the London Stock Exchange it can pick and choose what information it gives out, making it less transparent for journalists while probably making their job a bit easier,' says one national retail correspondent.

And for all the talk of the new comms challenges it faces, Asda has not been short of positive coverage - it only just missed out on the top spot (to Tesco, somewhat inevitably) of PRWeek's Reputation Monitor, which measured the volume of positive news gained by companies in 2004 (PRWeek, 10 December 2004).

This statistic is little surprise to many journalists, who say the comms team at Asda is more open than some rivals.

The Grocer editor Julian Hunt says the level of interest in the sector has grown so much that the lack of financial figures does not limit the amount of coverage.

'I don't think there's been a time when so much has been written about the grocery retail sector,' he says. 'It's an unbelievable time. The people working in the PR and corporate affairs side must be having a great time.

There can't be a dull day.'

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