The preceding report has yielded the following findings:
Asda is one of the largest retailers in the British market.
Asda is willing to liquidate its flaws in order to ensure customer satisfaction and increase consumer base connection to the brand.
Improvements manifest themselves through an increase in the number of stores and the enhancement of the quality of services provided, including the online ordering of home delivery, email sending, and club cards.
Improvements are expected to convert customer satisfaction into stable repurchase behavior.
Asda is taking great pains to generate new ideas stimulating the happiness of consumers following their purchase experience.
With readiness to change and openness to new ideas in mind, the company will most likely be willing to implement recommendations put forward in what will follow.
Introduction
Although one of the largest in the UK, the Asda retailer network needs to improve its ways. To stay competitive, it needs to invest in price reduction throughout all facilities, revise product category composition, improve staff retention, and retain signature attraction services. To fund the expansion, it ought to utilize funds saved via interest-free trade credits. Although Asda defers to sustainability and other legal initiatives, the retailer needs to improve compliance with labor laws. The company is doing excellent job implementing globalization-facilitated IT technologies, yet the best way to go global would be by entering the European market at least for tax reasons. Overall, Asda is large British retailer that remains promising despite legal, and competition issues to handle.
Operations
Asda bring more value to its consumers by acquiring and running petrol stations that bring famous petrol prices to British towns (ASDA Press Center, 2016). The retailer is deploying different equity building approaches in an effort to win the price competition through customer retention. The approach seems wise and deserves continuing, with the less known facility category maintained across major regions where retailer physical presence is strong. Asda will be investing a projected 1.25 billion pounds in quality and price over the following five-year period (Wal-Mart Stores, Inc. 2014, p.9). The funds will be the major resources requisite for the implementation of its strategy of building a competitive enterprise, which it will be doing at its principal business facilities, the network of stores like supermarkets, superstores and supercenters reported by ASDA (n.d.) as three major categories of retailer facilities. Now that stiff competition has come to characterize the retailer landscape of the UK, the consumer-oriented price strategy is the best solution to sales woes. Clements (2015) suggested that Asda stood most to lose from budget supermarkets having fallen to winning consumer from British retailer giants, Aldi and Lidl being important competitors. Kantar Worldpanel (2015) reported the sales of discounters to have picked up 10% of the market share for the first time, as against the 3.5% drop at Asda.
Smaller retailers like Lidl and Aldi seem to have grown in recent years, unlike Asda (see fig.1). The growth of Lidl and Aldi stood at 19% and 16.5% respectively in the 12-week timeframe. Asda’s share took a dive landing to a low of 16.4%, as compared with the negative trend of 2.5% and 1.7% showed by Tesco and Morrisons in that order (Kantar Worldpanel 2015). Therefore, the price flexibility investment strategy currently considered by the retailer for its implementation in all three types of facilities is the best solution to poor figures, or else Asda is doomed to lose the competition race. The sector seizure or customer fight in the spirit of dumping seems to be dominating the service industry of the UK for now; thus, Asda is recommended to play by the rules. To show the company is straining every never to offer the best price possible, Asda could refund any difference should consumers find such, yet the problem is that the method is already in use. ASDA (2015) reported that the retailer got offering the repayment of the 10% difference between its products and those sold by Sainsbury’s, Tesco, Waitrose, and Morrisons if that be the case.
Topping (n.d.) defined extreme diversity in a single store as Asda weakness, with categories like clothes, food, household, electrical goods, and even gardening sold under one roof. Thus, the reduction of the excessive set of merchandise or the repackaging of stores through a wiser categorization as such that are oriented on household, electrical tools, and gardening or food and clothes is recommended. The wide range of products that is the case now may not allow ensuring the greater depth of specific goods putting strain on the logistical system. It may be that excessive diversity tells upon the knowledge of the salespersons necessitating more intense money-consuming staffing. If Asda stores are not overstaffed, which they are not in the light of personnel cutbacks, it may take sellers significant time to master all requisite information on a variety of product categories.
Here comes a challenge since there is a layoff causing great demoralization, as noticed by Topping (n.d.). Butler (2016 b) noted that the retailer wished 1.360 middle managers all good in the future endeavors in 2014 in a move that saved 1 billion pounds. Asda put 1.000 store and staff canteen workers out of job (Butler 2016 a). As for ill-grounded, nay, unplanned terminations, Vinter (2012) reported that an Asda employee suffering with an inborn stammer received his walking papers after his attempt to communicate being viewed as aggressive and noisy. Matthew (2015) described a female supermarket cleaner as having been fired and banned from all Asda stores for doing nothing more than buying buns on the lunch break. Worse, Asda salaries are meager requiring state subsidizing (Waugh 2015).
If not fired on the spot, employees may not last long on their position, which makes challenging teaching the ever rotating staff the product diversity. More importantly, frustrated over unforeseen or systematic discharge, employees grow discouraged, which affects their efficiency and translates into lower revenue; thus, apart from restructuring, Asda needs to improve the payroll and give their staff the sense of security through employment stability free from irrational layoffs. Employees are important as actors ensuring the competitive operation of the retailer facilities. Furthermore, Butler (2016 a) asserted that Asda was on the point of cutting pharmacy opening hours, selling off or closing photo-developing services, decreasing customer services, inclusive of George clothing advice and fresh pizza making in an effort to axe the number of workers. Asda may scrap what gives it a competitive edge or consumer-beloved services making Asda so special that are worth retaining. Pairing the food category and such signature service as pizza making can be a wise move of building branches of the supermarket network that are more specialized.
Finance
The government earmarks 11 billion pounds annually to subsidize supermarkets like Asda that fail to provide their employees with adequate wages above the subsistence level (Waugh 2015). While the subsidy is no credit entirely investible in expansion since a way to maintain the welfare of employees, Asda may use state support and funds unethically saved through payroll minimization to funnel them into expansion. Beyond that, Plender (2005) noted that suppliers had often served as surrogate bankers to Asda on a significant scale providing the increasing funds at a time when the flow of cash from depreciation covered not more than a third of aggregate investment outlay. Suppliers reduced the need for the retailer to resort to bank finances or the support of the American parent company, Walmart as well as mollifying balance-sheet-related strain (Plender 2005). Bank funding conditions may be prone to changing creating a source of instability.
Moreover, Fitzpatrick and Lien (2013, p.39) noted that a rise in interest rate makes bank credit costly leading businesses to scale down their borrowing. Accessibility may be funds beyond the fiscal system that impose zero interest payment in the shape of trade credits. They help cushion the impact of an adverse change in bank credit availability (Fitzpatrick and Lien 2013, p.39). While it is not credit, trade credit can allow Asda to deal with supplier without borrowing from banks. The retailer can economize on expenditure bank loans would necessitate and shunt the saved funds onto expansion. The approach eliminates bank risks associated with funding conditions and credit availability along with the need to pay interest. Asda will be best served by creating an ad hoc fund for expansion filled with funds saved via trade credits.
Law
As follows from above, Asda employees earn small salaries and often have their labor contracts terminated for no good reason, both being legal violations. Ahmed (2014) stated that Asda was already facing a mass legal action for the breach of equality law, under which pay must remain identical for the labor of equal value. Glovers (n.d.) noted that wrongful dismissal builds on statute and contract law. A breach in contractual obligations can entail employer’s liability to damages or compensation. This is not to say that Asda does not comply with British laws. Watts (2015) reported that the supermarket chain has raised 156.000 pounds during half a year of a Community Capital Fund campaign, whereby the retailer charged consumers five pence per every single-use carrier bag. The purpose was for the campaign to fund Scottish social enterprises. In the event of noncompliance, according to the Single Use Carrier Bags Charge (Scotland) Regulations (2014), Asda would be liable to an undisclosed amount of fine that presumably must not go beyond the statutory maximum. Furthermore, Haughton (2015) described the chief executive of Asda as trying to get the next government to modify Sunday Trading laws in the belief that limited retailer hours on Sundays are unjust to customers, with shoppers made to purchase identical merchandise at costlier convenience stores outside the hours, during which larger facilities are licensed to trade. Noncompliance, according to Sunday Trading Act (1994), would cost Asda a fine not surpassing 50.000 pounds per facility.
Globalization
Harnessed by retailer giants like Asda, information technologies are the biggest product of information and technology exchange that globalization engenders and facilitates. Wal-Mart Stores, Inc. (2014, pp.8, 16) noted that Asda had an online grocery business growing at a fast pace. The business is the embodiment of the physical-digital convergence that makes for a unique consumer experience exclusively characteristic of Walmart and its affiliated businesses. The Walmart Stores owning Asda is making use of the finest international practices to boost site visits and diversify services like the Asda Direct kiosk, whereby consumers can order products from online catalogs while in the store. ASDA (2015) reported about the refunding of the 10% price difference between Asda and its competitors. All the consumers will need to do will be access the price guarantee webpage, enter a store receipt, and check an online shop after purchasing at least 8 various items, of which one must be comparable to Sainsbury’s, Tesco, Waitrose, and Morrisons (ASDA 2015). Since the technology offers consumers goods at a better price, the initiative gives the retailer a competitive advantage.
Burn, Marshall, and Barnett (2007, p.125) noted that the ASDA website had Store Finder, an innovative search engine allowing consumers to locate any store in proximity, information on distance, its address, fax and telephone included, and a map, by typing the name of their current whereabouts. However, Ng (2015) reported the adoption of the innovation by Sainsbury’s, Morrisons, Asda, and Tesco. Although ceasing to be what is a competitive advantage, the finder as the IT product of globalization allows the retailer to stay as competitive as other industry rivals are. Brand Bank (n.d.) noted that Asda initiated cooperation with Brand Bank closing the gap between the retailer and its suppliers by providing innovative reporting systems and technologies and the ability of producing, optimizing, managing, and delivering the large amount of data an imagery from in excess of 3.000 suppliers (Brand Bank n.d.).
When it comes to further globalization efforts, what it may need to do may be expand into the EU. Affiliated, the UK-based retailer will have fewer issues entering the market. Europe may be a new consumer base eager to experience a different service. Large companies often outsource their operations abroad and park income in tax heavens due to national taxation regime not being favorable. Chan (2014) claimed even Kiribati and Macedonia to have a better tax system than the UK does. According to the World Bank (2014), the burden of red tape threatening to whittle down the government’s progress in corporate tax reduction is said to be impeding British commercial enterprises (cited in Chan 2014). If Asda expands, it may be better off doing so in more favorable taxation climate in Europe, which may be financially beneficial, yet Asda will have to say farewell to government’s subsidies when running Europe-based stores unless they are supportive of foreign job-generating ventures. If the insular state like Kiribati and the developing economy like that of Macedonia have better conditions, much remains unachieved in the UK taxation-wise. In addition, in a bid to win the favor of the regulars of Walmart, its current parent company, Asda can render Walmart vouchers and discounts applicable on the British soil.
Conclusion
Profitability and size notwithstanding, Asda needs to rebuild its competitiveness through price reduction, category-based repackaging of branches, and staff retention improvement. In case of expansion, it should make savings through the interest-free trade credits. The retailer also needs to revise its compliance with labor laws. While its globalization-enabled use of technologies for building brand equity is successful, it may be better off expanding into Europe with its strong economic affinity for tax reasons.
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