Asda's famous slogan 'thats Asda Price' is displayed inside a store UK's third biggest supermarket ... [+]
Mohsin and Zuber Issa, founders of convenience and fuel retailer EG Group who acquired a majority ownership stake in supermarket chain—Asda, have announced the chain will undergo a £1billion transformation.
Often referred to as the “Issa brothers” the UK billionaires partnered with private equity group TDR Capital to buy Asda for £6.8 billion from US giant Walmart.
Walmart purchased the UK-based supermarket chain in 1999. It put Asda on the market last July, one year after the UK's competition watchdog stopped a merger with rival supermarket Sainsbury's. Walmart will retain minority shares in the grocer once the takeover gets the go ahead. This will mark a poignant moment as the chain will be under British ownership for the first time in over twenty years.
The Competition and Markets Authority (CMA) has set April 20 as the deadline for a preliminary decision on the transaction, having launched an investigation in December. The initial deadline was February 18 for the Phase One probe, but this was pushed back in order for additional documentation to be reviewed.
As the deadline gets closer to completion, Asda has announced the launch of consultations with approximately 5,000 staff members ahead of a major restructuring, which could potentially create cuts of up to 3,000 back office store workers.
Current Asda CEO and President, Roger Burnley said the review was being driven by changing consumer habits, which have been exacerbated by Covid-19 and the lockdowns in the UK over the last 12 months:
"The pandemic has accelerated change across the retail sector especially the shift towards grocery home shopping and our priority is to serve customers in the way they want to shop with us.
"The last 12 months have shown us that businesses have to be prepared to adapt quickly to change and I am incredibly proud of the way we demonstrated our agility and resilience through the pandemic.
"We know that these proposed changes will be unsettling for colleagues and our priority is to support them during this consultation process.
"Our plans to transform the business will result in more roles being created than those we propose to remove and our absolute aim is to ensure as many colleagues as possible stay with us, as well as creating the opportunity to welcome new people to our business."
UK shoppers have turned to online grocery delivery in large numbers since the pandemic with a quarter of consumers reportedly buying food online at least once a week according to research from supermarket chain, Waitrose.
The big brand supermarkets in the UK have worked to deal with the increase in demand for online delivery services whilst also reviewing opportunities for further, sustainable growth in the service. At present, most of the major brands are reliant on picking and packing orders in stores, where challenger brand Ocado is a pure online grocer which uses entirely automated customer fulfilment centers.
More supermarkets are also setting up micro-fulfilment centers (MFCs)— a mix of store and automated warehouse to help make picking more efficient, with Tesco rolling out 25 in-store MFCs over the next three years, as reported by The Grocer. As Walmart has also made a significant investment in MFCs in the US, it is thought that Asda would potentially also bring in similar centres too.
The Co-op are the first UK retailer to use autonomous robot delivery working in partnership with ... [+]
The BBC has reported that Tesco are trialing deliveries via drone whilst the Co-op are the first UK retailer to use autonomous robot delivery working in partnership with technology company, Starship.
And as Amazon Fresh's entry into Britain further intensifies the pressure on established grocery chains, the steps supermarkets take right now to evolve to meet changing consumer demand is critical.
The potential job cuts may not be the only big change at Asda, as The Times reported recently that the brand may also be looking to licence out its own brand clothing label, George.
The newspaper reported that senior industry sources had hinted the George brand “was outside the area of expertise of the Issa brothers and TDR and they would be more comfortable licensing the brand or introducing more fashion partnerships to Asda’s shops to use excess space.” Asda and a spokesperson for the new owners declined comment.
