Asda reinstates Allan Leighton as executive chair amidst significant challenges.
- Leighton, who led Asda from 1996 to 2001, is credited with a successful turnaround during his previous tenure.
- The supermarket’s market share has declined, with a reported 5.5% fall in sales over 12 weeks prior to November 3.
- Issues such as leadership gaps, IT setbacks, and debt compound Asda’s struggles.
- Experts see potential in Leighton’s leadership but acknowledge that major hurdles remain.
Asda has reinstated Allan Leighton as its executive chair, following the departure of Lord Stuart Rose. Leighton, who previously led Asda from 1996 to 2001, is lauded for orchestrating a remarkable turnaround which included a £6.7 billion sale to Walmart. However, his return comes as Asda faces significant challenges, including a one percentage point drop in market share and a 5.5% fall in sales in the 12 weeks leading up to November 3.
Leighton’s experience is unquestionable, but the current landscape presents a host of new challenges compared to his prior tenure. The retail veteran acknowledges the significant effort required, committing to a three to five-year recovery plan. “It is going to take us that long to get it right,” Leighton stated, emphasising the long-term commitment required.
A significant issue plaguing Asda is its inability to appoint a new CEO, alongside an interrupted IT transformation project known as Project Future. Coupled with substantial debt and recent job cuts, these obstacles underline the uphill task ahead. Grocery Insight CEO Steve Dresser suggests that, despite the challenges, Leighton’s leadership can revitalise the workforce and tackle issues of morale, purpose, and value perception.
Further complicating the recovery is the recent news of a potential £100 million increase in Asda’s tax bill due to changes announced in the government’s budget. Nevertheless, Simon Walton, the head of consumer practice at Berwick Partners, expresses confidence in Leighton’s capability to steer another successful turnaround for Asda, citing his more recent achievements with the Co-op.
Despite the daunting tasks that lie ahead, industry figures like Clive Black from Shore Capital and retail consultant Nick Bubb see Leighton’s return as a strategic move. While acknowledging the depth of Asda’s issues, they note his ability to inspire and lead effectively, highlighting that fixing operational standards and store morale are among the key priorities.
As the festive season approaches, the immediate focus for Leighton and Asda’s management team is to stabilise the situation, particularly in terms of sales and customer experience. Experts agree that a robust strategy post-Christmas, and the first 90 days of Leighton’s tenure, will be critical for setting the tone for the retailer’s future.
Allan Leighton faces an arduous task ahead but his past successes provide a glimmer of hope for Asda’s recovery.
