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Asda slows down convenience store expansion in London

Article By: ,  Financial Analyst
October 20, 2015 12:36 PM

Asda has said it will shelve its plans for London expansion, as well as the roll-out of click and collect sites.

The move has been made in a bid to cut costs. In August, the big-four supermarket reported its worst quarterly figures in its 66 year history. Last week, the retailer's parent company, Wal-mart, recorded its worst one-day share price loss in 15 years following a profit warning.

Andy Clarke, chief executive at Asda, called the cost-cutting programme "Project Renewal". He said the move was an attempt to simplify the retailer and focus on improving the core business. It will "better address the fast-changing needs of [Asda's] customers in today's market", he added, explaining that the project will involve a comprehensive review of the company's pricing structure and ranges in order to keep up with the competition of discount supermarkets like Lidl and Aldi.

Asda will also be slowing down its plans to open more stand-alone petrol stations – it had originally planned to have 100 new stand-alone stations over the next five years.

Non-essential expansion on hold

Mr Clarke says that Asda's new focus would be on larger superstores and customer service. he added that non-essential expansion would be put on hold. The company had already announced investment in 95 of its biggest stores. It will also be slowing plans to develop out-of-store click and collect sites – previously, the company had planned to have 1,000 click and collect locations by 2018.

Two new superstores opened in London this year and three more are planned for next year. After that, however, expansion in the capital will begin to slow.

In addition, the company's business to business sales operation will be closed. Nearly 30 people have been made redundant from the company's head office in Leeds as a result of these changes – the total head office workforce is around 3,500.

"Asda is a strong and profitable business which has built its success on delivering everyday low prices and good value to customers through efficient, friendly and well-managed stores. This is a winning strategy and we are determined to stick with it," Mr Clarke said.

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