November 6, 2024
Union calls for urgent action to protect jobs as Asda ‘fights for survival’ | Asda

Union calls for urgent action to protect jobs as Asda ‘fights for survival’ | Asda

The GMB union has called on Asda’s owner to take “urgent action” to protect jobs amid signs the supermarket is “fighting for survival”.

Data on Tuesday showed that sales at Asda fell 6 percent in the three months to August 4 despite ongoing food price inflation, sending the retailer’s share of the UK takeaway grocery market to 12.6 percent – its lowest level in at least 13 years.

The 1.1 percentage point decline marks the fifth month of declining market share for the retailer in the index compiled by analysts at Kantar, although the pace is gradually accelerating.

The sharp drop in market share – from 13.7% in the same period last year – comes amid a chaotic period at the top of the group, which was bought for £6.8 billion in October 2020 by the billionaire Issa brothers from Blackburn and private equity firm TDR Capital.

Zuber Issa is selling his 22.5 percent stake in TDR, while his brother Mohsin will retain his share but is expected to step back from day-to-day operations when the deal closes in the fall.

Nadine Houghton, national representative of the GMB union, which represents thousands of Asda workers, said the union would write to government ministers to “raise our concerns about job protections and value for consumers”.

She said TDR Capital had “loaded debt on this British institution and now the rot is creeping in” and that “urgent action” was needed to save jobs. She added that cutting working hours had led to lower standards and a loss of customer confidence.

“Asda’s declining market share is entirely due to TDR Capital’s financial mismanagement and Asda is now fighting for survival.

“It’s time for TDR Capital to get serious – if they get it wrong, over 150,000 jobs are at stake. TDR must start listening to its employees to stop this worrying and dramatic decline.”

At the weekend, Asda chief executive Stuart Rose said he was “ashamed” of the supermarket’s performance under his leadership. Lord Rose suggested Mohsin Issa should step down from running the supermarket.

Issa’s presence is seen as being of little help to the company’s efforts to recruit an experienced manager to turn Asda around.

Reports this year suggested that there had been a rift between the Issa brothers following the breakdown of Mohsin’s marriage, which reportedly sent “shockwaves” through the family. However, in March, Mohsin Issa denied that there had been an estrangement and said the couple “get on exceptionally well”.

An Asda spokesman said: We recognise and accept that there are areas where improvement is needed and have identified the priorities we need to focus on to meet this challenge.”

The group said it would invest a further £30 million in its stores this year to improve customer service and product availability, and would also spend money on IT to enable the separation of its systems from those of its former majority owner Walmart.

“Since acquiring Asda in 2021, the shareholder group has invested more than £3.8 billion to transform the business into a diversified retail group and position Asda for long-term success.

“Unlike our competitors, Asda is going through a major period of transformation,” the spokesperson said. “While we have recognised that our recent sales figures do not reflect where we want to be, Asda remains firmly the third largest supermarket in the country. We delivered total sales growth of 2% excluding fuel in the first half of 2024 and continue to see growth in both our online division and the George business.”

TDR declined to comment on GMB’s criticism. However, when Gary Lindsay and Tom Mitchell, managing partners of TDR Capital, announced the deal to acquire Zuber Issa in June, they defended their record at Asda, saying they had made “significant progress in transforming” the chain.

They added: “We added a convenience business at scale, grew Asda’s store footprint from 623 to 1,200 stores and food-to-go locations, and launched a hugely successful loyalty app which now has 6 million active customers and accounts for around half of total revenue.”

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