Today in retail: Asda’s jobs pain for long-term gain

Despite the public reputation retail has seemingly built up – “toxic” is how former Co-op chief executive Richard Pennycook described it – no business enjoys, or wants to be associated with, cutting swathes of jobs.

But, in the current landscape, they are tough calls that have to be made.

The Walmart-owned grocer is playing catch-up to its mainstream rivals Tesco, Sainsbury’s and Morrisons, as well as the discounters, having suffered 11 consecutive quarters of falling sales.

The 18 underperforming stores Asda has identified – where the 3,257 staff that face losing their jobs or having their hours slashed currently work – have bore the brunt of its failure.

Customers have either migrated online, started using self-scan alternatives to checkout, or, in plenty of cases, realised there is better value for money to be found by shopping elsewhere.

When that happens to the extent it has with Asda, stores simply do not need as many staff as they once did.

The move will hurt Asda as much as it hurts those employees impacted, but if it can divert investment to other areas of the business, it will be for the good of the business.

Earlier in the day, DFS said its EBITDA would come in at the lower end of its guided range after “weaker trading” during its second half.

But there were contrasting fortunes for Card Factory, which reported a spike in sales in the six months to July 31.

Quote of the day

“Retailers should be mindful that a penny saved is not always a penny earned”

– Alvarez & Marsal’s Lawrence Hutter’s warning for the likes of Asda, Tesco, Sainsbury’s, John Lewis and M&S, which have all cut jobs in recent months

Today in numbers

66%

The proportion of UK consumers that remain familiar with the Safeway name, despite its disappearance from the high street a decade ago, according to ICM data compiled exclusively for Retail Week. 

82%

The jump in pre-tax profit posted by Toys R Us in the year to January 28, surging to £42.7m.

Tomorrow’s agenda

With no financial results expected, check out our latest episode of The Retail Week as Carpetright chief executive Wilf Walsh joins the team to discuss job cuts − and sofas.

Luke Tugby, head of content