Asda’s clothing brand, George, is now the UK’s leading fashion retailer . This may not sound so momentous today but, back at the brand’s launch in 1990, the idea that a supermarket chain, and particularly Asda, could beat M&S at its own game would have seemed incredible.
Back in the early 1990s, with its young management team of Archie Norman and Allan Leighton, Asda was struggling to survive after over-stretching itself during an acquisition of Gateway stores. What’s more, supermarkets were primarily a food and household shop, and not the multi-category retailing behemoths we see today.
Norman, however, knew that Asda’s stores were much larger than their rivals and, by carefully analysing the success of WalMart in the USA, he realised that the space they had available, the convenience of their locations, Asda’s cost advantages against high street fashion retailers, the flair of the brand’s initiator George Davies and the huge weekly footfall into their stores meant that a real opportunity existed to create a major fashion brand.
By the end of the decade Norman, Leighton and their management team, which included current retail leaders such as Justin King, Andy Bond and Richard Baker, had completely turned the business around. Critical to the success and the company’s future growth prospects was the George brand.
Norman’s genius was in being able to spot and exploit the real assets, capabilities and advantages of Asda in radically new ways. Importantly, he also realised that customer behaviours are not fixed, and that if the value was compelling and it was easy to shop, shoppers would be willing to buy fashion at a supermarket.
Asda is not alone in radically recombining existing assets to drive dramatic new growth. In the 1990s IBM’s new CEO, Lou Gerstner, saw that, despite the poor performance of the company’s core computer mainframe business, there was clear customer demand and respect for its support service operations. This insight formed the basis of the company’s transformation from a manufacturer of corporate mainframes to becoming a major consultancy and outsourcing player.
Similarly, and perhaps most famously, Apple has re-invented itself from a niche computer manufacturer to the one of the world’s leading digital media and communication companies, on the back of its development and exploitation of iTunes software. As a result Apple is now the world’s largest retailer of music.
In the business world, nothing is fixed in stone. Although inertia exists in most organisations it is possible for all companies to reinvent themselves.
Two-thirds of the Fortune 500 companies were established during recessionary periods, and the uncertainty of the next few years will create new opportunities in most markets.
Will your business be one of the few that adapts to meet these new opportunities and become the leader in your chosen markets?
(Pic: Dominic’s pics cc2.0)
