June 27, 2013

Asda reassigns store space for community use

Andy Clarke, CEO Asda/Walmart (photo: The Daily Telegraph)
Andy Clarke: "We want our stores to be at the heart of their local communities"
Now didn’t Robin Hood also come from the North of England?

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.
 

INTERVIEW
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


erhalten


Den Interessenkampf von Produzent und Konsument


in echte Partnerschaft


wandeln


Den Handel zu wahrem Dienst an der Volksgemeinschaft


erhöhen


Die Persönlichkeit im Massenzeitalter


Stärken


Gottlieb Duttweiler


----------------------------


* 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



Comments for this article are closed.

  1. Robert Clark
    Created 8 August, 2013 17:44 | Permanent link

    Just a few thoughts from the UK for your readers, Mike.

    In very general terms, I think you will find that those UK multiples operating big box stores first look to sub-let, where this can be achieved, or introduce financial services desks, opticians, dispensing pharmacies, even dentists etc. Also, one should not leave out cafés and eateries etc. in the list of additional space uses.

    Furthermore, it should not be forgotten that the multiples are still opening additional space -- my local Sainsbury's superstore is more than doubling space from about 35,000 sq ft to around 80,000 sq ft.

    However, where there is excess space -- and I suspect there isn’t a lot and just a few specific instances -- I believe using it for community purposes would be viewed positively here in the UK. Corporate Social Responsibility in broad terms is quite important here -- the big, bad, greedy corporates get brownie points for such community-oriented initiatives: Fairtrade; providing supplier communities in Africa with sports facilities (Waitrose); dairy farmers' energy inputs, best practice schemes (Sainsbury's); sponsoring local football club shirts (Waitrose with Reading); and local school sporting facilities (Sainsbury's Active) etc.

    I don't think it is seen as a sign of failure here as it perhaps would be in Germany; O.K. maybe a failure to some marginal extent, but much better to use it for such purposes, if it can't be sublet rather, than shuttered up. I regard it as a positive move in the face of relatively minor adversity, making the best of an unfortunate, possibly temporary, situation. Also, don't forget we've not really got that many hypermarkets here in the UK -- really just the Tesco Extra burst of only a few years back and Sainsbury Savacentres originating a decade before that.

    I honestly don't think we've got a third excess retail space supply here as in Germany. And most of what is surplus is in small High Street units rather than in the superstores -- the best shuttered High Street units of which the Big Boys have moved into, opening hundreds of newer convenience-oriented Express, Local, Little etc. units. Additionally, retail services operators take them on -- Starbucks, Prêt à Manger, Weatherspoon pubs etc. Volume sales are not down much overall.

    Most of the corporate collapses, even the bigger ones, have been High Street, non-food chains. I know there is a figure doing the rounds of about 20% empty retail units quoted for the UK, but that will be far less than 20% of retail space (5-10% maybe?), with location issues built in.

    Retail sales here are still growing and so are volumes. Indeed, I suspect, retail space overall is still edging ahead, albeit at much lower rates than over the last couple of years. Maybe flat at worst. Sure, many medium and larger non-food multiples now have too many physical stores and, indeed, have been very slow here to bite the bullet.

    Thus, many more can be expected to close in the relatively near future, especially when leases come up for renewal (with a few years’ cushion built in). National coverage used to be 250-300 units, and is perhaps now nearer 150 in the new e-commerce world (where we are pretty advanced, having now reached almost 10% of total retail sales), but... From now on, unsustainably greedy landlords will have to share the pain and accept lower rents, letting in more Indies, dynamic new kids on the block, alternative uses etc.

    To reiterate, the odd example of turning excess superstore/hypermarket space over to community use is not viewed with shock horror here, but much more positively. It is seen as making the best of a temporarily bad job that the company can well afford to do - and, indeed, should be wanting to be seen doing as a responsible community contribution.

    Incidentally, Asda Clapham Junction is also my local Asda. I confess, I've not noticed any changes in the store. It has long had a day nursery in the car park. It was expanded with a new mezzanine floor for “George” clothing, electricals, home office supplies, a café etc. only a few years back. Despite what Clive Woodger said in your piece, this branch, at least, is very much located 'in town' –- and is not an edge-of-town store at all. It is adjacent to where the Clapham Junction riot took place two or three years back and is in a very mixed area socially.

    There has been huge gentrification nearby over the last 30+ years, but there remains an underclass in the borough that has been marginalised -- it was they who came in and congregated there to do their worst during the riots. Also adjacent is a vibrant mixed area: immigrant East African Muslims (quite a lot of Somalis), older Afro-Caribbean families, plus younger, predominantly white, professionals all mixed in together.

    But perhaps the real point is that every instance is different and needs to be taken on its own merits, while nothing stands still, either, and local social etc. situations change and evolve. So, yes, there are community things that can be done with any spare space in places like Clapham Junction -- and a requirement for them.

This is an English-language blog, please write all comments in English!
Thank you.

stats