Roger Burnley has decided to step down as CEO of Asda next year once the business has transitioned to new ownership and a long-term successor is in place. Though not an unexpected development, the departure of Asda’s highly respected chief executive adds to uncertainty surrounding the business. In this article I look at the challenges facing Asda as its priorities shift under the Issa brothers’ ownership.
Roger Burnley to step down in 2022
Burnley has led Asda since January 2018, having joined the business as deputy CEO two years earlier from Sainsbury’s where he was retail and operations director. His time at Asda has been highly eventful with Burnley steering the business through numerous challenges. On top of the unique demands for the pandemic, he has led the business through a period of protracted uncertainty about its future; the Issa brothers’ acquisition being the culmination of Walmart’s desire to divest the business following the regulatory block in April 2019 put on its plan to merge with Sainsbury’s.
Planning for a managed succession
Commenting on his decision to step down Roger Burnley said: “My decision to leave Asda is personal and something I wanted to communicate to my colleagues as soon as I could. Whilst I remain fully committed to leading this great business for the next year and delivering our strategy, it is right to plan for a managed succession process well in advance.
“It has been a great privilege to play a leading role at Asda over the last five years – putting in place a clear strategy for long-term sustainable growth and doing the right things for our customers, colleagues and the communities we serve.
“I could not be prouder of our achievements during this time– which have seen us maintain our strong heritage as a value and values driven retailer, offering great products to our customers at consistently low prices as well as supporting our local communities. We have also developed our brand partnerships that mean we are an even more convenient place than ever to shop.”
Six challenges for Asda
- Enabling and managing the growth of online: during the pandemic, Asda has grown capacity to 1 million slots orders per week and will boost this further to support what is expected to be a permanent shift in demand. To achieve this Asda has initiated a major restructure of the role of stores which will increasingly function to support online sales as footfall from visiting shoppers diminishes.
- Reviving large stores: Asda is more dependent on large stores than its main rivals so needs new reasons for shoppers to use them as more sales shift online, the discounters and to convenience sector. Over the last two years, it has a good track record on bringing in new partners to develop its foodservice offer, introducing concepts such as Panku Street food, Kolaba Kitchen and ‘Sticks, bowls and rolls’. It has also brought in new non-food partners such as B&Q and Decathlon; retailers that face their own challenges with shifts in demand. However as these businesses take root, the need to define what the future grocery offer should look like will grow.
- Delivering on value: Asda’s new owners have committed to continue Asda’s low prices, conscious of their central role in Asda’s retail proposition. However their ability to deliver on price will be limited by the debts its new owners have taken on. Financial engineering will help to a degree, for instance through the sale and leaseback of Asda’s online distribution network and potentially a sale of the George clothing brand. But maintaining its reputation for leading on value will be challenging as the discounters and other Big Four players also sharpen up their pricing.
- Leading on technology: Asda sees technological innovation as key to operating more cost effectively and adding value to the customer experience. A good place to see this in action is Stevenage test and learn store where new ideas are tried out. Recent tests have included electronic shelf edge labels, digital promotional ends, and a way finding app. However it’s not clear how Asda will continue to be a technological leader when Walmart’s involvement is much diluted.
- Sustainability: last year Asda stepped up its focus on sustainability with the launch of a new test and learn store in Middleton, Leeds, that includes a host of new ideas to help shoppers reduce and reuse packaging. This ambitious store is part of a broader push to champion green issues for the mass market consumer and features refill stations from many leading brands. At the launch, Asda said it was aiming to introduce 40 refillable products by 2023 and invest in 50 closed loop and circular projects by 2030 but suppliers should stay close to developments to see if this commitment is maintained.
- Building scale in convenience: the new Asda on the Move format gives Asda a way to greatly extend its reach, with the concept likely to replace other retail fascias at EG’s forecourts. In addition, Asda has an opportunity to bring grocery click & collect to these sites, which can be much more conveniently located for shoppers than Asda’s stores.
More insight for Retail Analysis subscribers
- A new future for Asda: our first thoughts on what the agreed sale of Asda to the Issa brothers means for the retailer and suppliers
- Asda Middleton: see how Asda is trialling new ideas to reduce waste and packaging at its trial sustainability store
- Asda Stevenage: see inside Asda’s test and learn technology store
- UK results tracker: see how trading at Asda compares to key competitors