Asda to scrap plans for growth in London

Andy Clarke CEO of Asda Picture Bruce Rollinson
Andy Clarke CEO of Asda Picture Bruce Rollinson
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ASDA is to scrap plans to expand in London and will focus investment on its core superstores in a bid to win back customers who have jumped ship to discounters Aldi and Lidl.

The Leeds-based grocery chain, the UK’s second biggest after Tesco, announced plans to revamp 95 larger stores across the country which make up about a third of its big store estate.

The revamp will range from face-lifts to a full remodelling and each store will be given a tailored redesign.

A spokeswoman said the move was not a u-turn from earlier this year when the firm outlined its expansion plans for the capital.

Asda will also ditch plans to create 1,000 click and collect sites by 2018 and it will halt the expansion of the service into London Underground stations.

“We’re just halting investment in click and collect. It’s still key to us. We want to make sure we focus on stores and online and make sure we don’t spread ourselves too thinly,” said the spokeswoman.

As a result of the changes, 29 head office jobs will be axed. Many of these will come from the scrapping of the business to business division, which offered bulk orders such as nappies for nurseries.

The moves follow Asda’s worst ever quarterly sales performance when underlying sales fell 4.7 per cent in the 11 weeks to June 30.

Asda has refused to get involved in the money-off coupons that its rivals have reverted to in order to win back customers from the discounters. This has boosted rivals’ sales but hammered their profits.

Asda’s decision means underlying sales have suffered, but profits have been maintained.

The changes will go under the banner of Project Renewal, updating the group’s five year strategy and switching investment back to the group’s superstores.

The Project Renewal name was first used by former boss Archie Norman when he resurrected Asda in the early 1990s.

The spokeswoman said that current CEO Andy Clarke played a big role in that revamp so the name seemed suitable.

“We are harking back to our heritage,” she added.

The big four grocers - Tesco, Asda, Sainsbury’s and Morrisons - are all battling to stem the flow of shoppers to Aldi and Lidl, which are stealing thousands of customers every week by offering lower prices and fewer frills.

Last week Tesco hit back with a new Brand Guarantee Scheme which gives customers money back as soon as they pay for their shop if it would have been cheaper elsewhere.

Mr Clarke said: “Over the last two years, we have shown that we are ready to make necessary and early changes to match that ambition to the demands of our customers, especially at a time when the market is clearly undergoing permanent and rapid structural change.

“We need to simplify what we do by prioritising the first line of our strategy – improving our core business - and pausing activity in other areas so that we are not spread too thinly.​“

​Asda said it will work on the detail of the changes in partnership with its suppliers.

Last week Asda’s US parent, retail giant Wal-Mart issued a shock profits warning saying that earnings will fall by as much as 12 per cent as rivals eat into its market share.

Suppliers are bracing themselves for further squeezes as Wal-Mart tries to claw back market share.

Cameron Smith, head of recruiting firm Cameron Smith & Associates, said: “Suppliers are going to have to help Wal-Mart get back on track.”