Chanting the Asda mantra

BEFORE interviewing Asda's chief executive Tony DeNunzio, the company spin machine has decided I must spend half an hour with a carrot farmer. And not just any old carrot farmer, but one that Asda has called in to enlighten me about the supermarket giant's caring business practices.

Parading a friendly supplier in the staff canteen of Asda's York store is surely enough to make anyone feel a little sceptical. But the retailer is determined to demonstrate it does not use its financial clout to cripple suppliers, as it awaits the Competition Commission ruling that is likely to block it from buying Safeway.

Asda, which has overtaken Sainsbury to become second-biggest to Tesco, is tarred with the brush of its American owner Wal-Mart, started by Sam Walton in 1962.

Based in Bentonville, Arkansas, Wal-Mart is the world's largest retailer, with 1.3m employees and annual sales of £137bn. It bought Asda in 1999 for £6.7bn.

The firm, which outlaws unions, is blamed by some for the demise of community retailing in the US. But supporters say it is hardly Wal-Mart's fault that the company is so successful.

It has a unique - some say cult-like - company culture, which involves staff gathering for daily 'huddles' to do the Wal-Mart chant. This has been modified to an A-S-D-A chant in Britain.

Denunzio can't see what the fuss is about. Asda sales are growing strongly. Consumers love the brand and its low-price promise. Only 1% of food and 30% of other products are sourced globally, so he argues Wal-Mart hardly has British suppliers in an armlock.

'In that aspect, the company is very misunderstood. Asda is still a British company. There are no Americans in my senior team and the day-to-day decision-making is mine.'

DeNunzio says he speaks to his US bosses just once a month. As for the chant, he adds: 'It is a bit of fun, an energiser. We don't do it at every board meeting.'

Rodger Hobson, the local farmer who has been enlisted to speak, is keen to highlight that his rivals are 'envious' of the carrot contract he has with Asda. 'I'm guaranteed a profit, not a big one, but a guaranteed one - so long as the product is good enough,' he said.

Another surprise guest is Mark Harrod, managing director of Fenmarc, which supplies root vegetables to Asda. A willing convert to the store's philosophy, he sports a denim shirt emblazoned with 'Fenmarc and Asda, supporting British farmers'.

He fails to understand why I might question Asda's claim that he offers an independent view on supplier relationships. He said: 'I really believe in the way Asda does business. I personally get frustrated about a lot of stuff we read about Asda. I think consumers would really benefit from Asda buying Safeway.'

So does DeNunzio, though the big three bidders - Tesco, Asda and Sainsbury - look set to be barred. Morrison Supermarkets is the only one tipped to get through.

DeNunzio appears genuinely relaxed about the situation. 'I have a high degree of confidence in the Competition Commission,' he said. He reckons the panel 'is not overly concerned about suppliers. It cares more about local and national competition issues'.

The Asda boss says the number of Asda/Safeway store overlaps is less than the 90 estimated by Sainsbury. If Asda is given a conditional clearance it 'will be very flexible' in making store disposals.

Competition Commission chairman Sir Derek Morris, who has been touring supermarket stores, was impressed with Asda's low prices, said DeNunzio. 'He was very interested in our jeans,' - which start at £5 a pair. 'He was impressed, too, by some of the food - his wife normally shops at Waitrose.'

DeNunzio said: 'We don't need Safeway. We'd like the stores so that millions of shoppers can have the chance to shop at the UK's favourite supermarket, but if we don't get Safeway, we still have a clear strategy about price that will continue to succeed in the UK.'

The first standalone store selling Asda's George clothing range opens next month. Other acquisitions are possible if Asda fails to get Safeway.

Some think Boots or Matalan could be targets. Wal-Mart has made it clear it is interested in foreign deals and DeNunzio said: 'This might be in the UK.'

The publicity-shy executive is most at ease when walking around the stores. He wears a large badge that proclaims 'Happy to Help, Tony'.

Asda store managers aren't allowed to wear jackets because it gives the illusion of status and 'creates a barrier between them and the customer'.

DeNunzio has a fervent passion for Asda's principles. He said: 'The cultural aspects, the greeters, the badge, the huddles, are actually making Asda a great place to work. I fundamentally believe in it.'

He guides me around the aisles, chatting to shelf-packers and pointing out new food ranges. 'Are you on a diet?' he asks, showing me the low-calorie quiches. 'Whatever your taste or budget, we have the product for you.'

I am chastised repeatedly for referring to Asda workers as employees or staff. 'They are colleagues, not staff,' he says, reminding me that using other words 'creates barriers'.

Critics might think this show of egalitarianism is a little hollow. Shopfloor staff are paid £5.41 an hour if they stay for 12 weeks, whereas DeNunzio, whose salary is not disclosed, is likely to be on at least £1m.

Never mind, though - the lucky Colleague of the Month can boost their income by playing the Wheel of Fortune in the canteen, for prizes including £100, lunch for four in the Asda restaurant or a day off work. I stifle a giggle as he spins the arrow and it clatters to the floor, but he remains serious.

DeNunzio does not come to work to have a laugh. He is 100% focused on improving sales. Former colleagues heap praise on his business skills even though, in the words of one: 'You would not want to get stuck with him travelling across the Atlantic.'

Aged 43, he has been married to Julie for 21 years. They have a son of 11 and a daughter of 13, and live in Yorkshire. DeNunzio trained as an accountant before a stint at Unilever, with later jobs at L'Oreal and Pepsico.

He joined Asda in 1994 as retail finance director, taking the helm in September 2001 after Paul Mason quit to join Matalan. He is one of many top managers who cut their teeth at Asda, including M&S food boss Justin King and new Boots chief executive Richard Baker.

DeNunzio rarely gives interviews, speaking to people outside the company 'only when it is appropriate'. He said: We don't boast about what we've achieved, we focus on our customers and our colleagues.'

He shuns the retail circuit, only occasionally meeting rival executives at industry dinners. He admits to a 'huge sense of pride and achievement' when Asda overtook Sainsbury. He reckons Sainsbury boss Sir Peter Davis is right to invest to modernise the stores, but adds: 'You do have to question whether he is driving sales hard enough.'

Since taking the top job at Asda, DeNunzio has had no crises of confidence in his own strategy and store sales are still rising.

'There is always a fear that it will come to an end and that is one of the things that motivates me,' he says. 'How can we keep it going and make it the best Asda it has ever been? That is what gets me up in the morning.'