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© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
A Supermarket’s Perspective On Local Sourcing
Richard Pearson
General Manager, Local Sourcing & Ethnic Ranging
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Agenda
The strategic context
Local sourcing definition
Why it’s important to the customer
Asda & hubs
Our commitment to small suppliers
The future
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Asda’s Operating Principles
Mission
To be Britain’s best value retailer exceeding customer needs…Always
Purpose
To make goods and services more affordable for everyone
Values
Respect for the individual
Strive for excellence
Service to our customers
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Truly local stores
We sell for less
Stunning fresh food
20% Unique and Exciting
George - the value fashion
brand
Hassle free shopping with
personality
Our people….do it fast;keep it simple and
celebrate
The Strategic Context: Asda Formula For Change
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Truly Local Stores
People
Product Community
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
People
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
People
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
People
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Agenda
The strategic context
Local sourcing definition
Why it’s important to the customer
Asda & hubs
Our commitment to small suppliers
The future
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Asda Local Sourcing Definition
Local Products are those which are:
• Made Locally • Grown Locally
– or
• Reared Locally – and are a
• Local Taste • Local Delicacy
– or
• Understood to be Local – and have
• Significant customer demand
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Product
National
Regional
Local
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Community
2006 Highlights
• £4.2m for Tickled Pink
• 195k for Everyman
• 390k raised for Children in Need
• 69,000 colleague hours in the community
• £2m raised for local charities through fundraising and bag packing in store
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Community
Bags for life
Green goodies for schools
Packaging reduction challenge
Walmart global commitment
Wal-Mart CEO Lee Scott Unveils "Sustainability 360"On February 1, Wal-Mart President and CEO Lee Scott unveiled "Sustainability 360" - a company-wide emphasis on sustainability extending beyond Wal-Mart's direct environmental footprint to engage associates, suppliers, communities and customers. The announcement was made during Scott's keynote lecture at the Prince of Wales' Business and the Environment Programme in London
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Community: Eat London
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Community: Eat London
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Agenda
The strategic context
Local sourcing definition
Why it’s important to the customer
Asda & hubs
Our commitment to small suppliers
The future
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Why It’s Important To Customers
“I think it’s good if you buy local because you know that it hasn’t been
freeze-dried or suspended in any way.”
“I think it’s good if you buy local because you know that it hasn’t been
freeze-dried or suspended in any way.”
“There’s a definite taste difference with local. You can
just taste that it’s fresher.”
“There’s a definite taste difference with local. You can
just taste that it’s fresher.”
“I like to keep local businesses going where I
can.”
“I like to keep local businesses going where I
can.”
• Support for local economy
• Perceived freshness & taste benefits
• Prefer seasonal availability
• Better for the environment
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Why It’s Not Important To Some Customers
“It keeps people in a job, but it’s too expensive to buy all the time”
“It keeps people in a job, but it’s too expensive to buy all the time”
“It depends what you call local. I’d always thought fruit and veg was local anyway…
because it’s fresh. It can’t really come from far away…can it?”
“It depends what you call local. I’d always thought fruit and veg was local anyway…
because it’s fresh. It can’t really come from far away…can it?”
“For locally grown things you’d go to the farm shop, if you were
that worried about that”.
“For locally grown things you’d go to the farm shop, if you were
that worried about that”.
“If it was the same price I’d buy local but if it’s
more I wouldn’t.”
“If it was the same price I’d buy local but if it’s
more I wouldn’t.”
• Implication of premium pricing
• Nice to have vs need to have
• All year round availability vs seasonality
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Agenda
The strategic context
Local sourcing definition
Why it’s important to the customer
Asda & hubs
Our commitment to small suppliers
The future
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Asda & Hubs: Plumgarth Hub Launch 2002
‘The Prince of Wales was encouraged by your partnership with Plumgarths in Cumbria . It is a model of how a supermarket can work with local farming communities to make a real and lasting difference and hopes it will be followed by others ‘
Sir Donald Curry ‘I am really pleased to lend my support to the ASDA/Plumgarth initiative and would call on other retailers and producers to follow this lead’
Spring 2006 “Best Business Initiative: Grocer Gold Award for regional hubs
2003 IGD Ian Maclaurin Award for Supply Chain Excellence
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Benefits Of Local Hubs
Local expertise
Store & supplier relationships
Food miles
Simpler for suppliers
Simpler for stores
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Agenda
The strategic context
Local sourcing definition
Why it’s important to the customer
Asda & hubs
Our commitment to small suppliers
The future
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Our Commitment To Small Suppliers
Top level support
Expanding specialist team
Better than standard trading terms
Direct to store or hub
One store at a time
Technical assistance
No costly technology needed
Minimum 12 week promise
Training & information
Marketing & PR support
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Agenda
The strategic context
Local sourcing definition
Why it’s important to the customer
Asda & hubs
Our commitment to small suppliers
The future
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
The Future: The Customer
Increased demand for personalised offer & convenience
Increased demand for value on food basics
Increased demand for provenance integrity
Increased polarisation in shopping list requirements
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
The Future: The Retailer
Race to capture niche to mainstream market share
Choices to be made around strategic range opportunities
Back to the future regional focus
Middle market suppliers under more pressure
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
The Future: The Supplier
Choices to make about route to market risks & opportunities
Choices to make about local to regional to national expansion
Requirement for upgraded people skills
Challenge to face as national brands deliver provenance integrity
© ASDA 2007. COMMERCIAL IN CONFIDENCE: No reproduction, disclosure or other use is permitted without license.
Summary
Asda has total commitment to making its local offer work for stores, customers & suppliers
Customers will be relentless in their demands. To make the most of this opportunity, suppliers and retailers must up their game
Suppliers must decide what role they want to play within this process and invest in the necessary resource & infrastructure to deliver