Asda reassigns store space for community use
Andy Clarke: "We want our stores to be at the heart of their local communities"
Asda’s plan to offer excess out-of-town hypermarket space to local communities has stirred debate in the UK and even triggers echos of Swiss retail visionary Gottlieb Duttweiler*.
As the Leeds-based Walmart subsidiary, with estimated 2013 revenues of €30bn, is the UK’s second-largest retailer this obviously carries weight.
CEO Andy Clarke’s decision reflects a number of major trends: The growth of online, convenience and discount shopping; the difficulty of selling general merchandise in big-box food stores; a “space race” and land bank legacy with too much store footage chasing too few consumers in a long recession.
Lebensmittel Zeitung also asked Clive Woodger, Chairman of brand consultants SCG London, to assess Clarke's ideas. As a retail architect at design company Fitch over 20 years ago, Woodger was instrumental in developing Asda’s “Superstore of the 90s” in the middle of the space race.
Meanwhile, as Germany is far more overstored than the UK, shouldn't we also be talking about Asda's initiative here?
Big boxes & white elephants
Asda doesn't seem to be flying a kite. The multiple has teamed up with the Royal Society of Arts (RSA) on pilot stores in Clapham (London), Tilbury and Oldham to work out how excess square footage could be used to benefit local communities.
The “new model for retail” could make store space available to local authorities, businesses, voluntary groups and education authorities.
“The nature of retail is changing, and, as a result, local communities’ interactions with retailers are also likely to change. The aim of this project is to examine how we can continue to add social value to the local areas we serve,” says Asda corporate affairs director Paul Kelly to the The Grocer.
This is skilful Corporate Social Responsibility (CSR) packaging for a company with not just one but a herd of white elephants on its hands (approx. 314 superstores & hypermarkets with an average shop space of 4,370m²).
Tesco prefers to drink coffee
It certainly contrasts with other approaches by major rivals. Tesco intends to fill excess space in its “Extra” hypermarkets with gastronomic offers. These include the recently acquired Giraffe restaurant chain and Harris + Hoole coffee shops as well as artisanal bakeries.
The leading UK retailer is also downsizing and will reduce its Stockton-on-Tees outlet, for example, from 12,000m² to 8,000m² by installing a gym and a children’s play area.
Clearly, all European hypermarkets are at a late stage in their 50-year life cycle and need to redefine their relevance to consumers. At any rate, they are very far from the early boom days when the motto ran: “no parking, no business”.
Meanwhile, the demise of Carrefour's “Planet” concept in France last year will not have escaped the attention of European retail managers. Big investment in jazzing up hypermarkets does boost revenues, but not always enough to save one’s bottom line.
Feral youth & CSR
Asda’s new project, which follows the launch of its Community Life programme last year, must surely also be seen in relation to the outbreaks of pillaging and arson by English youth in August 2011. These not only hit Asda and the major multiples, but also Aldi, Lidl and former Metro Group subsidiary Makro.
Admittedly, German-speaking countries are not home to masses of unemployed and ill-educated young people without social orientation or future perspective. But Asda’s initiative recalls the conviction of Gottlieb Duttweiler* that retailers should provide "true service to the community".
The visionary Swiss innovator and founder of Migros demanded that retailing should also exercise a social and ethical function.
Not all parties in the UK, however, see Asda as a knight in shining armour. As The Grocer reports, James Lowman, CEO of the Association of Convenience Stores (ACS), doubts the logic and efficacy of "shifting community facilities out of town".
Others, such as RSA chief Paul Buddery, ask whether Asda is "manoeuvring to monopolise" local spaces?
At the very least, Asda’s new policy could force major changes in store layout.
with Clive Woodger, Chairman, SCG London
Mr Woodger, what significance do you attach to Asda’s recent public services initiative?
The Asda situation is a key trend in the UK because all major multiples are moving to abandon their hypermarket plans in order to focus on convenience store retailing. Convenience and micro-retail is now a really active trend, and the large format is in danger of becoming a dinosaur.
UK shoppers want the total convenience that online allows, supplemented by local convenience shop accessibility. The aim is to avoid getting into a car and suffering higher fuel costs, inconvenience and loss of time.
Has Asda really gone social, or is the new initiative just pure economics?
Giving space to the community leverages floor space that they frankly do not need and also helps the retailer's community CSR credentials.
How does this compare with the strategic situation of Asda’s arch-rival Tesco?
Tesco has frozen its hypermarket site development and is coming under pressure to dispose of its land bank. It is also in intense competition with Sainsbury's to grab every city corner site and available unit in or near transport hubs and active High Streets.
Why is there so much blood on British High Streets at the moment?
Many of the UK's shopping centres are in real trouble with high vacancy rates. Retailers are reducing their store portfolios, given the reality of online and the clear overcapacity of shops in the UK.
While the government talks about initiatives to help depressed High Streets and to stop the rise of vacant shops, developers are looking at new uses for their vacant space.
Asda is clearly playing the community PR card. Will the strategy work?
"Community uses” sound good, but, ultimately, market forces dictate whether a location will decline due to its inability to attract people who will spend money.
When charity shops prevail and local community initiatives simply attract short-term, cheap-lease operators, then areas become “no go” zones for successful businesses.
So is Asda right or wrong?
Some creative thinking is vital – “new uses in old premises” is a classic trend, if they are viable in terms of their catchment area and appropriateness.
A ballet school in the middle of a shopping centre can be a great destination draw, helping to rejuvenate a declining centre. But, eventually, every use needs to create a return to the owner directly or indirectly.
Aiming to be in the heart of the community should be an obvious attribute for the major grocers who need to constantly help their public image — look at the bad PR Tesco has to contend with by being seen to be too big, etc.
What are the consequences from a design point of view?
Every hypermarket operator has to think how they can downsize and still make money. Nobody wants to be in an empty store which is clearly too big for its purpose, but the rent still needs to be paid.
Replanning the stores and offer needs some careful thinking in terms of product rationalisation. One must then decide on how to create coffee/food offers, for example, that can become local-first-choice and social/pit-stop venue destinations in their own right at different times of the day.
Creating spaces, facilities and destinations that will attract people again and again has been a basic shopping centre challenge for years, and now the big-box guys need to think in similar ways.
They must develop destinations which allow people to create their own dynamics. This includes offering events and activities that will attract a diverse range of consumer/visitor mindsets and profiles from morning till night!
On the international trade speaker circuit you have often talked about the importance of creating the “wow factor" in retailing. How do you see this in relation to Asda’s new project?
Ultimately people attract people. To be frank, the success of Asda's proposals will depend on the quality and longevity of the activities on offer and the skill of the local people involved in managing and maintaining interest.
Asda and the community activists need to approach the marketing and organisation of the spaces in a professional way and should learn from the best shopping centres.
Empty art exhibitions and keep fit classes would, for instance, be the kiss of death and an unhelpful credential for Asda.
Related article in German: By Mike Dawson in Lebensmittel Zeitung, no. 26, 28.06.2013
Podcast. Click arrow to listen to an audio version of the text:
* Der Mensch im Mittelpunkt
A poetical meditation by Gottlieb Duttweiler, founder of Swiss consumer co-operative Migros
Die Einsicht der Wissenschaft
die Erfahrung der Fachleute
die Kraft der Genossenschaft
vereint im Ziel
einige der schwersten Aufgaben unserer Zeit
lösen zu helfen
Mangel aus Überfluss sättigen
Freiheit und Initiative
durch freiwillige Verantwortung
Den Interessenkampf von Produzent und Konsument
in echte Partnerschaft
Den Handel zu wahrem Dienst an der Volksgemeinschaft
Die Persönlichkeit im Massenzeitalter
* The Human Being at the Focus of Things
The discernment of scientists
The experience of specialists
The strength of the cooperative
United in the aim of helping to resolve
Some of the gravest problems of our age
To satisfy need by abundance
To preserve freedom and initiative through voluntary responsibility
To transform the conflict of interests between producer and consumer into genuine partnership
To elevate distribution into a true service to the community
To affirm individuality in an age of social levelling