Asda, the grocery store chain that Archie Norman had just been hired to lead, teetered on the edge on bankruptcy and ruin. While Asda had enjoyed a long run of success in the United Kingdom, upscale competitors and down-market deep dis-counters had sharply eroded its customer base. Norman, an outsider to Asda who had never run any retailing operation, believed that Asda could not afford the luxury of piecemeal or incremental improvement. Everything about the organization - from the way they purchased and displayed products to the way store managers interact-ed with shop-floor employees - would have to change. Everything.
Company Background
With 65,000 employees in 205 Asda stores and another 2,000 at corporate headquarters, Asda was the fourth largest grocery store chain in its home country. Asda enjoyed annual sales of $6 billion,1 and claimed 8 percent of the supermarket business, ranking fourth in market share.
Starting in the late 1960s, Asda pioneered within the country the concept of large supermarkets located outside of downtown areas with expansive parking lots and low prices. Flourishing particularly in working class areas, Asda became known as a blue-collar store, specializing in low prices in a warehouse-like atmosphere (“Pile it high and sell it cheap” was a phrase commonly associated with this type of opera-tion). The demographics of their customer base was decidedly “down market.” In that niche, Asda was quite successful, operating without any real competition. The larger grocery store chains vied for more up-scale (i.e., wealthy) customers, and simply couldn’t compete with Asda on price.
Asda problems began when top management embarked on two equally disas-trous paths. First, they diverted much of the profit from the grocery operations into non-food acquisitions: retail operations like furniture and carpeting. And second, management moved to change