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George sets its sights on number one

Anthony Thompson, the new managing director of George at Asda, has ambitious growth targets for the next three years.

George at Asda managing director Anthony Thompson hates mediocrity. “If you are going to have aims and ambitions, make them something to really go for,” he says.

The targets he has set his business, announced last week, of taking top spot in volume clothing market share by 2011, and knocking Tesco off its perch as number one supermarket by market share for clothing by the end of this year, certainly fill that criteria.

To become the biggest volume market share retailer, George would have to increase its sales by £500 million in three years.

“If you think that’s ambitious, it’s probably a good idea that I stopped there and didn’t show you the two further aims that we shared with the team internally,” he grins. “Now those really were a big ask.”

Thompson has been at George for six months, after spending six months on leave after exiting Marks & Spencer as head of retail operations in a management shake-up. “I’d promised I’d take a year out after M&S, but it wasn’t to be,” he says. “Andy [Asda chief executive Andy Bond] called and I knew I couldn’t pass up the opportunity.”

The opportunity for George’s new management team – made up of Thompson, merchandising director Andrew Moore, who was formerly director of general merchandise planning at M&S, and brand director Fiona Lambert who worked at Next as womenswear product director – is to kick-start a brand whose progress they say has stalled.

That is not to say that sales and profits have remained flat. According to Thompson, George is still in positive territory with growing like-for-like sales, but the rate of growth has slowed and it has been overtaken by faster growing competitors.

Figures from retail analysis firm TNS for the past 12 months put George’s volume clothing market share at 8.7%, against M&S’s 11.4%, Tesco’s 9.3% and Primark’s 10.1%.

Thompson explains that George lost momentum in 2004, and although he does not mention it, this was the point that George product director Kate Bostock jumped ship to join M&S. In the middle of that year George was briefly number one in terms of volume clothing market share. “We’ve already been there when we had less space, so our ambition is not untested. At that point did George believe it could consolidate its position and make that lead permanent? Definitely, but it didn’t happen,” says Thompson.

He believes that aim was never achieved because George became distracted and lost focus, despite being sold in 353 UK stores including 13 non-food Asda Living stores, with 2.7 million sq ft of floor space and global sales of £2 billion.

“We drifted away from our core customer, which is the family, and concentrated too heavily on younger, faster fashion. We overcomplicated the business with too many sub-brands, bought too flat and had a confusing price architecture,” says Thompson. It was a strategy that led to George product being discounted for 49 weeks out of 52, causing growth of sales per sq ft to slow and profit per sq ft to fall.

Brand director Fiona Lambert says: “The big opportunity for George now is in the 25- to 45-year-old market and among 55- to 64-year-olds. In the 25- to 45-year-old age group we only have a 6% market share. That has to be an area where we can grow substantially if we get the product and value right.”

She adds that the 55- to 64-year-old market also has huge potential, and that at the moment those customers feel George does not offer anything for them. “Our customers tell us they want a great-quality, lower-priced Next or M&S offer – not another Primark.”

So how is the business restructuring to capitalise on this? In terms of product, George has simplified its sub-brands. The core George label will be aimed at 25- to 45-year-olds and will represent 70% of the offer. Two new sub-brands – Boston Crew for men and Moda for women – are aimed at the 45-plus market and will represent 20% of the offer, with G21 targeting under 25s, making up 10% of the total offer. The retailer has dropped its Must Have, Fast Fashion and Collections lines, while denim areas have been introduced.

As for pricing and merchandising, Thompson says it is all about building in a good, better, best architecture within each range and then buying with conviction. George has reduced the number of styles it offers by 20%, cut the number of price points by 30%, and increased its average line buy by 30% and promotional buys by 150%.

Lambert says: “In terms of styles we want the business to be confident, and offer fewer styles in more colours, stock them in depth and deliver with real authority.”

Thompson also wants to simplify George areas in store and make them more convenient to shop. He is looking for a marketing director who can deliver a tactical and operational strategy throughout the business, which will improve navigation and point of sale, and he is setting up a George Academy for store managers to share best practice.

If these strategies sound familiar to anyone who paid close attention to M&S’s turnaround, then Thompson is unabashed to confirm that he learnt a lot from Sir Stuart Rose during his time at M&S.

However, he adds: “When you look at the similarities in what has gone wrong in our business and what was wrong at M&S, it is no surprise that some of the strategy is the same. But what is more exciting are the differences in the brand and in the context and environment in which it operates. If we get things right, you’d expect customers in the current climate to be moving towards us because of the value market in which we operate.”

But it is that hoped-for customer momentum, rather than the strategy, that Thompson’s competitors question. One supermarket insider told Drapers: “By moving away from fast fashion and creating more commercial ranges, George will get more credibility and market share. But I’m not convinced it will be the number one clothing retailer by volume in 2011 – the market is too competitive. It’s a typically ambitious Wal-Mart-type statement, and it assumes that George’s competitors – Primark, M&S and Tesco – will make no progress.”

Another agreed, saying: “Becoming the number one supermarket clothing retailer by the end of the year isn’t that challenging given where George is now. To take the top spot in volume clothing market share by 2011 means the management is making some large assumptions about the progress of its rivals. Achieving this goal could very well depend on the success of the Living format roll-out and the George online launch.”

However, Thompson does not believe he needs extra space from Living to reach his goals. He is keen to stress that converting more Asda shoppers to buy George will be where the main growth should come from, although he admits the roll-out of Asda Living, which will double in stores to 26 by the end of this year towards an ultimate target of 200 stores, will help. “If you look at our rate of growth in 2004, if we had kept going at that pace then on the space we had we would already be the market leader,” he says.

Nick Gladding, lead analyst at consultancy firm Verdict Research, warns: “These targets are very ambitious but just about possible. I think whether George meets them depends a lot on what its competitors do. The market has moved forward a lot and the value sector is much more professional, so they will really have their work cut out.”

Perhaps it is best to leave it to a characteristically bullish Terry Green, Tesco chief executive for clothing and hard lines, to sum up the change in the competitive landscape since George last led the pack. Hearing of his competitor’s new strategy, he breezily told Drapers: “Good luck to them. We’ve got plans of our own as well.”

George in numbers:
George at Asda’s volume clothing market share in the UK
353: Number of stores in which George is sold
£2 billion: George’s annual global sales
2.7m sq ft: Amount of floorspace that George has across its UK stores

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