Asda has announced plans for a major store reset programme, including a £30m emergency investment into more staffing hours, after admitting it has fallen below the retailing standards customers demand.
The frank admission comes ahead of the supermarket giant’s second quarter results next Thursday. Co-owners Mohsin Issa and TDR Capital are under pressure to do something to reverse its falling market share.
Asda admitted a series of major projects – including the overhaul of its IT system to free it from the shackles of its previous Walmart ownership – had diverted resources from the core supermarket mission.
“We recognise that there are some areas where we can, and need to, improve, and have set out our plan for colleagues to improve the availability of products in stores, the overall customer experience, and ensuring we have the right trade plan throughout the remainder of the year,” said a spokesman for the retailer.
“We are investing an additional £30m during the remainder of the year to improve the in-store experience. This includes putting extra hours into store to help colleagues provide an even better service to customers.”
The announcement of Asda’s reset marks a distinct change in message from its owners and a recognition of the scale of the issues it is facing.
In April, co-owner Mohsin Issa told The Grocer he was excited at having “got the monkey off its back” after reducing the high debt leverage of the company.
However, since then, its share has slipped even further, with the latest figures from Kantar, covering the 12 weeks to 7 July, showing volume sales down 6.2%.
Criticism of Asda’s store experience for customers has been steadily growing and while it recently announced a £50m store upgrade programme across 173 stores, it is now injecting millions more, as an admission that it needs to urgently tackle the crisis.
Asda has also faced a series of strikes and protests by staff, led by the GMB union, which has accused its owners of slashing staffing hours. It has admitted the new moves are also aimed at helping to try to improve staff confidence and morale.
Earlier today, The Daily Telegraph revealed the results of a staff survey that showed fewer than half of workers are confident in the strategy at the supermarket, with only 47% of respondents to the company’s annual questionnaire, which was completed last month, saying they felt confident in its long-term strategic plan.
Meanwhile, only 48% of the 75,591 workers who filled in the survey said they felt they were able to explain the benefits of its IT overhaul, known as its ‘Future Programme’, which has resulted in major teething problems including thousands of staff receiving the wrong pay.
Asda claims its woes in part stem from the complication of dealing with strategies on multiple fronts, including the job of uncoupling its IT from its former Walmart ownership, as well as the expansion of its convenience network, which his grown the business to more than 400 stores.
“The business has been through a huge amount of change in the last 12 months,” said the Asda spokesman.
“Each of these projects on their own would be a challenge for any business to navigate through, and moving through them all simultaneously has been a significant undertaking.
“However, these major projects, which represent significant financial and time investment, will leave Asda in a stronger position for future growth.”
Asda is also continuing the search for a new CEO, with the position having been unfilled since Roger Burnley quit in August 2021.
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