 is embarking on yet another cost-cutting drive, leading to over 800 shopfloor employees at risk of redundancy or pay cuts.){kind=link}
Asda (NYSE: WMT) is embarking on yet another cost-cutting drive, leading to over 800 shopfloor employees at risk of redundancy or pay cuts.
In a document given to staff, the supermarket said it had no choice to make cuts in order to “close the price gap” in competition with Lidl and Aldi. 848 store workers across 600 stores are at risk or losing their jobs.
“We need to continuously review our operating model. … being the cheapest of the big four is no longer a viable business model. We need to be able to look at ways to reduce our operating costs in order to close the price gap,” said the proposal that was given to staff this week.
“We would explore redeployment opportunities, and only as a last resort, we would look at the possibility of redundancy with affected colleagues.”
As the German retailers grow rapidly, it’s UK competitors are facing little choice but to carry out large cost-cutting programs.
Earlier this year Sainsbury’s announced plans to cut 2,000 store and back office employees in order to save £500 million in costs. Tesco (LON: TSCO) is axing 2,300 roles under its own programme.
Asda said in a statement: “These proposed changes are about making sure we’re doing the best job for our customers in the most efficient way possible. Whilst these are only proposals, we know talking about change is unsettling which is why we’re working with our colleagues to get their views before any final decisions are made early next year.”
While Asda, Tesco and Sainsbury’s are axing jobs, Lidl announced last month that it was increasing hourly wages for its 16,000 employees.
“A lot of retailers have tried to remove section leaders but quality, particularly in produce, can suffer. You run the risk that what you save in headcount you lose in credibility,” said Bryan Roberts, retail analyst at TCC Global.
“But being in stock is more important to shoppers than stores looking pretty – if it looks bombed out that’s different, they probably expect more finesse from the big four [than a discounter].”