The British supermarket business has long been extremely competitive. This has led to a number of innovations. Tesco (the market’s biggest player) in particular has been lauded for its extensive loyalty program. Now the second biggest firm Wal-Mart owned Asda is trying to take building customer loyalty a step farther (Grocer Asda Turns to Customers for Advice, Wall Street Journal, Oct 2). The firm will now be actively soliciting customer feedback and advice.
My ambition for Asda is to actively involve customers in every aspect of the business, to lift the lid on how we do things, and enable our customers to help make decisions that have an impact on what we sell and how we sell it,” [Asda Chief Executive and President Andy] Bond said.
The firm is doing things like building a “transparent” store so that customers can see what happens off the sales floor. The most intriguing part to me is their attempt to get suggetions for cost reductions from customers.
starting early next year, Asda also will reward customers who come up with the “brightest idea” that saves the business money. If the suggestion is implemented and saves Asda £2 million, a customer could be in line to receive a check for £100,000, or 5% of the first year’s saving.
I must admit that I am dubious about this. I can imagine that customers have many ideas for new products to carry or convenience enhancements but I am dubious that customers can sufficiently appreciate the complexities of the business to identify large cost savings.