Walmart calls Sean Clarke out of China to turn around the Asda business

by Kim Souza ([email protected]) 517 views 

Walmart International CEO David Cheesewright has tapped Sean Clarke, the CEO of Walmart China, to take over the struggling Asda grocery business in the United Kingdom. Andy Clarke is stepping down as chief executive of Asda effective July 11, the retail giant confirmed this week after seven straight quarters of declining sales.

Andy Clarke has put in more than two decades of work at Asda spending the last six years as CEO. Walmart said he will serve as consultant to the business through the end of 2016 and retain his role president of the IGD, a research and training charity which provides information and best practices to the global food and grocery industry, according to the Walmart news release.

Sean Clarke is no stranger to the Asda business. Asda is where he began his his career with Walmart in 1996. He also worked in challenging markets like Japan and China and Canada which Cheesewright says gives him insight for the struggling Asda business.

“Actively managing our global business portfolio is a key element of our international strategy, and we must have the right talent in place to lead our businesses through times of change,” Cheesewright said.

He said Sean Clarke’s experience would allow him to “reposition the business” in a competitive market where Asda share has been beaten down from deep discounted like Lidl and Aldi. Walmart also confirmed that Roger Burnley will be named deputy CEO and chief operating officer of Asda when he rejoins the business in October 2016.

“Burnley will be a strong support to Sean Clarke having held a variety of senior leadership positions across commercial and operational functions of U.K. retail businesses. He worked at Asda between 1996 and 2002 and was part of the core team responsible for integrating Asda into Walmart following its acquisition in 1999,” noted the Walmart statement.

Sean Clarke, incoming CEO of Asda, Wal-Mart's retail business in the United Kingdom.
Sean Clarke, incoming CEO of Asda, Wal-Mart’s retail business in the United Kingdom.

Many thought Burnley would replace Andy Clarke as CEO when the announcement of his return to Asda was made.

Cheesewright recently told media during the retailer’s shareholder week that changes were in store for the struggling grocery chain, although the market in the U.K. was very “voucher driven” and Asda was not interested in buying share at unprofitable levels. He also defended the actions of Asda leadership, but also said he was “very disappointed in Asda’s sales performance in recent months.

Cheesewright said with Wal-Mart Stores investing so heavily in a U.S. store turnaround strategy, his Asda team was told to protect profits at all costs, even if that meant losing share. He said the team on the ground in the U.K. did just that – protected profits, at the expense of market share.

The four major grocery players in the U.K. also use everyday low price models and that has put deflationary pressures on prices and eroding profits, according to Cheesewright. He said Project Renewal is a step in the right direction as Asda has put $355 million into lower prices. He said it takes time for price investments to filter through but it’s starting to happen and he expects improvements in the Asda business this year. He said there would also be efforts to improve product quality to further enhance values in a deflationary market place.

He also said there is a true focus on dead net cost analysis with its suppliers to ensure the formulations of food products are gleaned as economically as possible in order to get the best bottom level price. Asda also set out to re-energize its large stores in the U.K. and began moving away from pickup depots and smaller formats.

Stewart Samuel, grocery analysts with IGD in Canada, said Sean Clarke brings a wealth of experience from two competitive markets in particular.

“From his time in Canada, he will have seen the continued growth of discount formats (albeit different to the hard discount formats in the U.K. market) and their impact on shopper behavior. Clarke was part of the team that oversaw Wal Mart’s rapid real estate expansion as part of Walmart’s response to the growth of the discounters, along with a sharpening of its price messaging,” Samuel told Talk Business & Politics.

Samuel said in China, also a highly competitive market, Sean Clarke has “stabilized the business and placed it on a stronger foundation to drive future growth. His insight into online grocery e-commerce, and particularly Yihaodian operations, in the China market, will also support Asda’s initiatives in this area.”

He applauds Asda’s efforts to regain lost market share and IGD reports that the retailer is starting to deliver a stronger price message as part of its plan to deliver a market-leading proposition. Samuel also said Asda is also undertaking a project of store regeneration, with new layouts, space swaps and fixture changes to reflect its latest thinking around large store formats.

“Operational improvements are also underway, focused on driving greater simplicity across the business, including range rationalization which is targeting a SKU (item) reduction of up to 25% across some categories. This will help it to drive stronger volumes across its most popular products, helping to unlock lower prices and improve availability,” he added.

With Sean Clarke leaving the the CEO post in China, Dirk Van De Berghe, president and CEO of Walmart Canada, will take over the same duties in China effective Aug. 22, pending work authorization. Van De Berghe will also serve as regional president for Wal Mart’s Asia business, including Walmart Japan.

Scott Price, who has served as CEO of regional president of Walmart Asia, will become chief administrative officer for Walmart International. Walmart said it will announce a new leader for Walmart Canada in the coming days.

“Dirk is well positioned to lead the China and Japan businesses due to his prior roles in Asia and his deep knowledge of the retail business from his time in Europe,” Cheesewright said.